Demand forecasting is the process of estimating future customer demand for a product or service. It utilizes historical data, market trends, and statistical tools to predict how much of a product will be needed over a specific period. Accurate demand forecasting helps businesses optimize inventory levels, reduce costs, and improve customer satisfaction. By analyzing factors such as seasonality, economic indicators, and consumer behavior, companies can make informed decisions about production and distribution. Effective demand forecasting is crucial for maintaining a competitive edge in today's fast-paced market, allowing businesses to respond proactively to changes in demand.