Accurate demand forecasting is essential for a firm to enable it to produce the required quantities at the right time and arrange well in advance for the various factors of production e.g., raw materials, equipment, machine accessories etc. People generally make short-term forecasts for operational reasons. Having a merchandise plan is critical for the success of every retail business. MARGIN SALES & FORECASTING OPEN TO BUY Merchandising INVENTORY Process MANAGEMENT PERFORMANCE ANALYSIS STOCK ALLOCATION DISTRIBUTION LOCATIONS People FINANCE SUPPLY CHAIN Influences MANAGEMENT REPORTING POS Systems SUPPLIERS MARKETING MERCHANDISING 2. Without proper demand forecasting processes in place, it can be nearly impossible to have the right amount of stock on hand at any given time. Assortment plans must determine the ideal product ranges and price lines for each unique location, channel and customer segment. The realism that good forecasting provides can help you develop and improve your strategic plans by increasing your knowledge of the marketplace. Internal business demand forecasting is a helpful tool for making realistic projections. Forecasting helps a firm to access the probable demand for its products and plan its production accordingly. Merchandise planning is a systematic approach to planning, buying, and selling merchandise to maximize your return on investment (ROI) while simultaneously making merchandise available at the places, times, prices and quantities that the market demands. Start studying chapter 12: managing the merchandise planning process. Consistently having the right quantities of the right product in the right place at the right price and at the right time is a cornerstone of effective retail merchandising. Forecasting is a projection of what is going to happen at a much higher level and includes revenue items, overall expenses, and other business components. It can also point you toward areas where you need to build capacity in order to meet expansion goals. Merchandise allocation is the process of determining how to distribute merchandise to individual store units for maximum sales and minimal markdowns. Top 10 Reasons Why Sales Forecasting Is Important. Forecasts may be short- or long-term. Learn vocabulary, terms, and more with flashcards, games, and other study tools. This forecasting model factors in your business financing, cash on hand, profit margins, supply chain operations, and personnel. Merchandise planning step by step process 1. Demand forecasting is a key component to every growing retail business. Depending on the size and sophistication of the retail operation, this can be a simple process, or an extremely complex algorithmic exercise. Sales forecasting is a key element in conducting your business. Forecasting. 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