Business – 8.1 Marketing analysis – Sales forecasting | e-Consult

Inaccurate sales forecasts lead to mis‑aligned budgets and poor allocation of resources, which can harm profitability and operational efficiency.

• Over‑estimated demand: Management may allocate excessive funds to production, resulting in surplus inventory, higher holding costs, and potential waste of perishable goods.
• Under‑estimated demand: Insufficient budgeting for raw materials and labour can cause stock‑outs, delayed order fulfilment, and lost sales, forcing the business to incur emergency procurement costs at premium prices.

Both scenarios illustrate how unreliable forecasts distort financial planning and the optimal use of assets.