Demand Forecasting
Demand Forecasting is a technique applied to turn data into valuable insights. It focuses on the future demand for a specific supply. This prediction is made using historical sales data that is shaped into a time series, i.e. a graph showing sales figures against a constant running time. Demand Forecasting is applied to recognize patterns and adjust business processes accordingly. After all, it creates an expectation of demand and sales.
Demand Forecasting is done using mathematical models also called autoregressive models. These models are composed of three components namely: the moving average, the autoregressive part and the noise. Moving average is the moving part that predicts the direction in which the time series moves in rough terms. The autoregressive part makes a prediction regarding the fluctuations around the moving part and the noice incorporates a certain margin. There are several models that can be applied to use demand forecasting.
