Question

Why is demand analysis essential for successful production planning and capital expansion?

Answer 1

Definition: The Demand Analysis is a process whereby the management makes decisions with respect to the production, cost allocation, advertising, inventory holding, pricing, etc. Although, how much a firm produces depends on its production capacity but how much it must endeavor to produce depends on the potential demand for its product.

Answer 2

Answer:

In order to make decisions on production, standard costing, product pricing, marketing, inventory holdings, etc., management must analyse the market sales of the product.

The amount of merchandise that the company must attempt to manufacture mostly depends on consumer demand. In order to develop their business operations, companies employ demand research methodologies to ascertain whether they can data is set a market and produce anticipated profits.

Additionally, it provides a better awareness of the markets with a strong demand for the company's products, providing them a good idea of the markets to engage in.

Explanation:

Demand forecasting also aids in risk reduction and improved financial judgement, boosting profit margins, working capital, resource allocation, and expanding growth potential.

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