Why is having sales orders consume the forecast a good featu

Why is having sales orders consume the forecast a good feature?

Solution

the main source of income to any manufacturing firm is selling a product and generating the revenues from the market. so, sales is the atmost activity to any organisation which is engaged in manufacturing. now one firm has to plan in such a way that they need to produce output to meet the market demand with the quality aspects as well as quantity aspects.

to manufacture a product we may require different kinds of inputs like material, man power, machine power and technology also. along with these 4 inputs we require sufficient time to manufacture the product. if we konw the quantity demanded by the customers then we can produce the exact number. but it is very difficult to catch the point. but there are some sales force people who will estimate the demand for the product in market aproximately, and based on the projections we can plan our productions.

and one more thing is if we are unable to provide the required product to the customer, he may go with some other competitors product. it costs a loyal customer to the organisation, it is not good to the firm. and if we wrongly estimated the demand and produce huge output, it leads to higher inventory to the producer. it causes to struck the funds.

so, to avoid both these problems one firm has its own sales forecast plans. and if there is little variation in those expectations and calculations, it can be acceptable also.