Demand Forecast of Britannia Industries Ltd

1 January 2017

The use of historic data to determine the direction of future trends is known as demand forecasting. Forecasting is used by companies to determine how to allocate their budgets for an upcoming period of time. This is typically based on demand for the goods and services it offers, compared to the cost of producing them. Investors utilize forecasting to determine if events affecting a company, such as sales expectations, will increase or decrease the price of shares in that company.

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Forecasting also provides an important benchmark for firms which have a long-term perspective of operations. Forecasting product demand is crucial to any supplier, manufacturer, or retailer. Forecasts of future demand will determine the quantities that should be purchased,produced, and shipped. Demand forecasts are necessary since the basic operationsprocess, moving from the suppliers’ raw materials to finished goods in the customers’hands, takes time. Most firms cannot simply wait for demand to emerge and then react toit.

Instead, they must anticipate and plan for future demand so that they can reactimmediately to customer orders as they occur. In other words, most manufacturers “maketo stock” rather than “make to order” – they plan ahead and then deploy inventories offinished goods into field locations. Thus, once a customer order materializes, it can befulfilled immediately – since most customers are not willing to wait the time it would take toactually process their order throughout the supply chain and make the product based ontheir order.

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