Why is it necessary for the organisation to forecast its inventory requirements?

If you donot know the inventory requirements of a+ fleet,you will end up in selling the trucks instead of maintaining them for operations.

Forecast in inventory help the management on determinate the affordable quantity the they need to produce also to determinant raw materials and cost of materials used 

Proper forecasting helps ensure you have enough supply on hand to satisfy demand

Hello to answer your question I answer is short simple explanations - I hope this helps

Inventory Benefits

Inventory Balance. Good inventory management helps you figure out exactly how much inventory you need. This makes it easier to prevent product shortages and keep just enough inventory on hand without having too much.

Inventory Turnover. You need to keep a high inventory turn over ratio to ensure your products aren’t spoiling, becoming obsolete or sucking up your working capital. Calculate how many times your inventory sells in a year and see where you can make better use of your resources.

Repeat Customers. Good inventory management leads to what every business owner wants – repeat customers. You want your hard-earned customers to keep coming back to your business to meet their needs. One way to do this is to make sure you have what they’re looking for every time they come.

Accurate Planning. Using smart inventory management, you can stay ahead of the demand curve, keep the right amount of products on hand and plan ahead for seasonal changes. This goes back to keeping your customers happy all year long.

Warehouse Organization. If you know which products are your top sellers and what combinations of products your customers often order together, you can optimize your warehouse setup by putting those products close together and in easily accessible places. This speeds up the picking, packing and shipping processes.

Inventory Orders. If you’ve done a good job keeping track of how much inventory you have on hand, you can make smarter decisions about when and what to order. Inventory management  lets you speed up the ordering process. You can simply scan a product barcode and type in some information to place an order and generate an invoice.

Inventory Tracking. If you have multiple locations, then inventory management becomes even more important because you need to coordinate your supplies at each location depending on differences in demand and other factors.

Ken Vidler     2

It will help organization to avoid stock out or to plan a promotion. Inventory requirement also need when an organization planning to launch to new product because if the product get notice well by customer than what will be the minimum time to fulfill customer demand, how much finish good inventory is required and what will be lead time to receive raw materials and what will be cycle time to make the product. Inventory forecasting can be done by various methods like naive, exponential smoothing etc for on going products and qualitative forecasting for new or break thorough products.

Hope this will help to you understand.

Because it is your backup strength and you know very well about your organization.

When you place a purchase order with a supplier, it will take some time for the inventory to reach your door. This is called lead time. A local supplier’s lead time may be one to four days, while an overseas supplier’s may be four weeks. Therefore, you should have at least enough inventory to last during the lead time.

Many things can happen during the lead time period. The supplier may delay in delivering your order, for example, or you may get an unexpected bounce in sales. So in addition to having enough stock during the typical lead time, you should also keep a bit extra and forecast your inventory requirements and this is   known as safety stock.

That helps the organization to know market needs without falling in the expiration date mistakes, storage space, and save money for other items.