Arrange the steps in demand forecasting from beginning to end:

A. Specifying objectives
B. Making choice of methods
C. Determining the perspective
D. Estimation and interpretation of results
E. Collection of data and data adjustment

Correct option is D

The correct order of steps in demand forecasting is:

1. A. Specifying Objectives:
   The first step is to define the purpose of the demand forecast, such as inventory planning, production scheduling, or financial forecasting. Without a clear objective, the forecasting process can lack focus and relevance.

2. C. Determining the Perspective:
   The next step is to set the perspective or scope of the forecast. This involves deciding on factors such as the time horizon (short-term or long-term), geographic coverage, and the level of detail required.

3. B. Making Choice of Methods:
   After establishing the objectives and perspective, the appropriate forecasting method is selected. Options include qualitative methods (e.g., expert opinions, Delphi method) and quantitative methods (e.g., time series analysis, regression models).

4. E. Collection of Data and Data Adjustment:
   Data relevant to the forecast is collected and adjusted to remove inconsistencies, anomalies, or seasonal effects. Accurate data is crucial for generating reliable forecasts.

5. D. Estimation and Interpretation of Results:
   Finally, the forecasting results are estimated using the chosen methods, and the outcomes are interpreted. This step includes evaluating the forecast's accuracy and applying the results to decision-making.

Information Booster

Demand forecasting is essential for businesses to predict future customer demand and plan accordingly. It aids in inventory management, production planning, financial budgeting, and resource allocation. Accurate demand forecasting reduces costs and enhances customer satisfaction by ensuring products are available when needed.