What describes the concept of "demand forecasting"?

The concept of "demand forecasting" is best described as the process of estimating future customer demand. This is a critical function in logistics and supply chain management, as it helps businesses anticipate how much product will be needed in the future based on various factors such as market trends, historical data, seasonality, and economic indicators. Effective demand forecasting allows companies to optimize inventory levels, improve customer satisfaction by ensuring the availability of products, and reduce costs associated with overproduction or stockouts.

Evaluating past sales data alone does not encompass the full scope of demand forecasting, as it is just one part of the overall process. Similarly, calculating current inventory levels and assessing shipping delays are operational tasks that also do not capture the predictive nature of demand forecasting, which focuses on estimating future needs rather than current metrics or past performance. Therefore, understanding the nuances of demand forecasting is essential for effective logistics planning and execution.