DEMAND & STOCK PLANNING
Demand Forecasting
Demand forecasting estimates future demand for a defined product, location and time period using data and stated assumptions.
DEMAND FORECASTING IN PRACTICE
- Define the forecast
- Estimate future demand
- Compare with actuals
A WORKED EXAMPLE
1,000 forecast. 1,150 actual.
A weekly forecast predicts 1,000 units and actual demand is 1,150. The forecast is short by 150 units. If error is defined as actual minus forecast, the error is +150. State that convention before comparing reports. One week does not establish the model’s long-term accuracy.
WHAT THIS MEANS FOR YOUR QUOTE
Make the requirement explicit
Use the same scope and units when comparing providers. Put the agreed responsibility, included work and exception process into the service description.
A LITTLE MORE CONTEXT
Questions about Demand Forecasting
Are sales and demand identical?
No. Stockouts, cancellations and other constraints can make sales differ from what customers requested.
Should forecasts be updated after the period?
Actuals should be compared with the forecast version available at the decision time, with revisions preserved separately.
Source & example notes
Microsoft Learn: demand planning. Further reading on the related controls and terminology. Product documentation describes a particular implementation; it does not establish a universal procedure or service commitment.
Definitions and worked examples are prepared by 3PL Hub. Numbers are illustrative, not provider rates, operating targets or guarantees.
Last updated: · 3PL Hub
