Forecasting System Outputs:

To plan for different periods in the future, the production manager would need a forecast of expected demand rather than future sales. Demand is represented by orders received from customers, while sales refer to shipments made. Demand may be different from sales on account of several reasons. One reason could be lost sales due to limited production capacity. Another could be the delay in the timing of shipments because of production lead times. When there is no record of customer orders, there may be no other option but to rely on sales data only, but it must be remembered that the resulting forecasts may not then relate exactly to future demand for the reasons stated.

The output of a forecasting system may be expressed in several forms depending on the use to which it will be put to. For instance, for its use to formulate a marketing strategy, the estimate of future demand may be expressed in the form of Rupee sales broken down by region or by some customer attribute such as age, sex, education, social status, etc.