According to APICS (American Production and Inventory Control Society) Dictionary,

“Forecast is an estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and a forecast can be based on extrinsic (external) or intrinsic (internal) factors.”

Although the term forecast can be applied to many things such as Weather forecast, economic growth forecast and more, here we are going to focus on forecast and forecasting as used in businesses and again related particularly to the forecast of products sold to their customers i.e. Sales Forecasting. Sales Forecasting is used in the practice of Customer Demand Planning in every day business forecasting for manufacturing, distribution and retail businesses. The discipline of business forecasting, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and judgemental forecasting using a consensus process.

Sales Forecasting is the business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance. In Supply chain management  Sales forecasting is used to make sure that the right product is at the right place at the right time. Accurate sales forecasting will help manufacturers, distributors and retailers reduce excess inventory and therefore increase profit margin. Accurate sales forecasting will also help them meet consumer demand.