Demand Forecasting System:

As an activity within an organization, forecasting is needed to provide relevant information regarding the future to production, marketing, finance, and others that needs it for planning purposes. This function is performed by a system which, like any other system, can be analyzed in terms of its six key components:

1. Forecasting-system outputs (information given by a forecast)

2. Forecasting-system inputs (information required to prepare a forecast)

3. Forecasting constraints (factors limiting the method used)

4. Forecasting-system decisions

5. Forecasting-system performance criteria

6. Forecasting methods (for converting inputs to outputs)

These components are shown in Figure.