Description

The forecast of demand forms the basis for all
strategic and planning decisions in a supply chain.
Throughout the supply chain, all push processes are
performed in anticipation of customer demand whereas
all pull processes are performed in response to
customer demand. For push processes, a manager must
plan the level of production. For pull processes, a
manager must plan the level of available capacity and
inventory. In both instances, the first step a
manager must take is to forecast what customer demand
will be. For example: Dell orders PC components
in anticipation of customer orders, whereas it
performs assembly in response to a customer orders.
To determine the amount of components to have on hand
(a push process) and to determine the capacity needed
in its plants (for pull production). Dell requires a
forecast of future demand. Forecasts are also needed
further up the
supply chain.