Demand forecasting is the process of estimating how much of a product or service customers are likely to need during a future period. It uses historical sales, seasonal patterns, market conditions, customer behavior, promotions, and other relevant signals to identify expected changes in demand. Forecasts can range from simple statistical estimates to models powered by machine learning.
A retailer, for example, may forecast higher demand for certain products during holidays and adjust purchasing and inventory levels accordingly. Manufacturers can use forecasts to plan production and raw-material requirements, while logistics teams can anticipate capacity needs. Accurate forecasting helps balance product availability against the cost of holding excess inventory. Related concepts include predictive analytics, time-series analysis, inventory optimization, supply chain management, and machine learning.
