Demand forecasting is used to predict future demand for a firm's products so they can plan production accordingly. It allows for better planning and resource allocation. There are characteristics of good forecasting methods like time horizon, data patterns, cost, and accuracy. Demand forecasting can be short-run to set sales policies and scheduling, or long-run for capital planning. Forecasting also differs based on the period, level, if for a new or established product, and type of product. The steps involve identifying the object, determining product nature, analyzing demand determinants, choosing a method, and testing accuracy. Common methods include survey, statistical, and reasoned opinion approaches.