OBJECTIVES OF DEMAND FORECASTING

There are various objectives of demand forecasting that may be broadly divided into two categories:
(a) The short term objectives and,
 (b) The long term objectives.

The short term and long term objectives of demand forecasting are:

A. Short term

• Helps in reducing costs of raw materials and control inventories,
• Make arrangements for short terms financial requirements.
• Establish targets and to provide incentives to sales force.
• Make arrangements for appropriate promotional efforts such as advertising and sales campaign etc.
•  Formulate pricing policies for achieving desired results.
• Demand forecasting assists in production planning and scheduling operations to avoid overproduction and underproduction.

B. Long term

• To predict demand.
• To provide information on the proper product mix 
• To achieve the objective of ascertaining future demand for the product so that the firm can plan for new units, new projects, new plants, expansion of existing scale of operations. 
• Preparing plans for long-term financial requirements and take steps for arranging these finances.
• Planning for long- term human resource planning with training programs well in time for future expansion programs.
• Adapting  to new products likely to come up in the market.
• Developing different processes in view of heavy growth in the demand for the product.
• Taking major decisions in large businesses.
• Serve more than an intuitive assessment of the future by those involved in the decision.