Question

1. Please describe a scenario (Please don't use the sauce example it has already been used multiple times) that you have encountered recently as a consumer where a business has either under forecast or over forecast demand for a product that you were planning to purchase. You will generally notice under forecasting if the product is out of stock or over forecasting if there is excess inventory for the item. Please describe the implications to the retailer, manufacturer, and broader supply chain. You can present your response through the lens of your own discipline (accounting, marketing, etc.) if you wish. (Please don't use the sauce example it has already been used multiple times)

2.  Give three examples from your life in which you may forecast the future. Highlight the importance of accurate forecasting in the three examples you provide.

Answer 1

1. Under forecasting or over forecasting of demand for a product is somewhat dangerous to the business, because when a customer requests for a product, which is under forecast, we will not be able to provide the customer with the requested stock, so that seriously effects our business,
   
   For instance, Consider we are having a large soft drink manufacturing company for which there is one customer who gives us an income of 80% and from the rest we get 20% (pareto rule). Say, we have forecasted the amount of demand to be 10,000 units this year basing on the trends and other factors. Last year there was no sales upto the mark which we have forecasted so we have forecasted considering that trend. Let us assume that only 2000 units are only left with us and our main customer has ordered 5000 units with an immediate effect. Now we are going to get in a serious problem since we have under forecasted the demand. It is always wise to rethink before taking some decision.
   
2. I cannot give you real life examples but i can provide you examples relating to forecasting the future by taking my career as base. THe first one is that i have forecasted an amount of money that i need for buying a house and later for a car and later for my children. See these three things might seem simple in terms of forecasting but every thing if we need to forecast certain terms we need to assess all the possible concerns and forecast the terms we require.