What is the purpose of demand forecasting?

The purpose of demand forecasting is fundamentally to predict future sales and adjust production accordingly. This process involves analyzing historical sales data, market trends, and other relevant factors to make informed estimates about future demand for products or services. By accurately forecasting demand, organizations can optimize their inventory levels, reduce the risk of stockouts or overstock situations, and align production schedules with expected customer needs.

This strategic alignment ensures that resources are utilized efficiently, which can lead to cost savings and improved customer satisfaction. It allows businesses to plan their operations effectively, ensuring that they meet market demands without incurring unnecessary costs or waste.

The other choices, while important aspects of overall business strategy, do not capture the primary aim of demand forecasting. Increasing marketing efforts can be a response to demand forecasts but does not represent the forecasting function itself. Similarly, reducing logistics costs and maintaining supplier relationships are operational aspects that might benefit from good forecasting but are not the core purpose of the forecasting process.