Forecasting is a decision-making tool used by many businesses to help in budgeting, planning, and estimating future growth. Moreover planning and controlling logistics systems need predictions for the level of future economic activities because of the time lag in matching supply to demand. In the simplest terms, forecasting is the attempt to predict future outcomes based on past events and management insight. (Steven Bragg, What is forecasting, 2018).
Equalization definition:
Method of equations:
First: Determine the size of the tie:
The equation is as follows
Sales at break-even = fixed costs + variable costs
Support the organization to make sales decisions:


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Advantages of Forecasting:
1. It Increases customer satisfaction because after predicting product demand customer orders will be fulfilled in a shorter time.
2. It will reduce inventory stock outs by only providing what approximately customers demand.
3. It will reduce product obsolescence costs because when removing obsolete inventory the volume of inventory on hand will decrease. With this, both direct and indirect costs of keeping the obsolete inventory will be reduced.
4. Improving pricing and promotion management by integrating distributor-level promotions and related forecasts will allow improving the flow of goods and achieving better results in terms of availability and stock fill rates.
5. With accurate sales forecasting, a higher rate of on time in full, or OTIF, delivery can be achieved.
6. Continuous improvement can be achieved when forecasting sales and continually revising the process to improve the accuracy.
Disadvantages of Forecasting:
1. It is not possible to accurately forecast the future. Any unforeseen factors can render a forecast useless
2. The longer the forecasting period, the less accurate the forecast will be.
3. A bad forecast can result in financial ruin for the organization, so an organization should never base decisions solely on a forecast.
4. Unpredictable revenue, revenue based on sales forecasts is only moderately predictable.
5. Unexpected occurrences because nothing is certain.
6. Invalid expert opinions
Issues of Forecasting:
1. Some forecasting methods may use the same data but deliver widely different forecasts. For example, one forecasting method can show that interest rates will rise, while another will illustrate that rates will hold steady or decline.
2. All qualitative forecasts assume that certain market characteristics that existed in the past will exist in the future. Unfortunately, during each operating period, the market can be positively or negatively affected by unexpected occurrences, such as weather events, changes in tax code and changes in competitors’ products and services
3. In times of political and economic uncertainty, historical data may be obsolete, although current data may not be available. In such cases, in developing a forecast, a small business may rely on the opinions of company leaders, if the opinion of one person, whose view prevails, is incorrect, the forecast is incorrect.
4. The longer the forecasting period, the less accurate the forecast will be.
5. Sales people, who tend to be optimists, will likely develop a forecast that is overly optimistic.
6. Building a sales forecast with any level of accuracy is incredible intensive


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