Demand forecasting is the process of using predictive analysis of historical data to estimate and predict customers’ future demand for a product or service. Demand forecasting helps the business make better-informed supply decisions that estimate the total sales and revenue for a future period of time.
Through demand forecasting, businesses can optimize inventory by predicting future sales from analyzing historical sales data to make informed business decisions about everything from inventory planning and warehousing needs to running flash sales and meeting customer expectations.
With the help of Facebook's time series model, Prophet, we can forecast sales demand into the future. Prophet is an open source project released by Facebook to forecast time series data based on an additive model where non-linear trends are fit with yearly, weekly, and daily seasonality, plus holiday effects. These attributes make it especially suitable for tackling business time-series problems like Demand Forecasting.