Answers:
The
data of sales forecasting is very essential for an industrial enterprise or a business
firm. In producing units, the importance of sales forecasting is greater because
of their varied problems of producing and distributing the products on a large
scale. Sales forecasting is a guiding factor for a firm because it enables the
firm to produce the actual quantity of the required quality product, at the
right time and at a reasonable price. The firm can arrange the various
resources, such as raw materials, equipment, machines, accessories, labour
buildings, etc., required for production well in advance. Only a few firms
produce products on the basis of the orders received from customers; most of
the firms produce in ‘anticipation of demand’. Forecasting helps a firm to
assess the probable demand for its products and plan it accordingly. With the
help of sales forecasting, the producer can prepare production schedule and can
reduce inventory, production and other related costs.
The
importance of sales forecasting lies in its correctness. The abovementioned advantages
of sales forecasting can be taken only if the forecasting is accurate and close
to the actual performance. For this purpose, a review of estimates should be
made from time to time.