The Impact of Aggregate Forecasting on StrategicInvestment and Growth

The forecast of demand forms the basis for allstrategic and planning decisions in a supply chain.Throughout the supply chain, all push processes areperformed in anticipation of customer demand whereasall pull processes are performed in response tocustomer demand. For push processes, a manager mustplan the level of production. For pull processes, amanager must plan the level of available capacity andinventory. In both instances, the first step amanager must take is to forecast what customer demandwill be. For example: Dell orders PC componentsin anticipation of customer orders, whereas itperforms 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 neededin its plants (for pull production). Dell requires aforecast of future demand. Forecasts are also neededfurther up thesupply chain.