Enhancing the Inventory Management through Demand Forecasting

Afif Zuhri Muhammad Khodri Harahap, Mohd Kamarul Irwan Abdul Rahim, Noor Malinjasari, Suzila Mat Salleh and Rabiatul Adawiyah Ma'arof
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Afif Zuhri Muhammad Khodri Harahap: Universiti Teknologi MARA (UiTM) Cawangan Terengganu Kampus Dungun, 23000 Sura Hujung Dungun, Terengganu, MALAYSIA
Mohd Kamarul Irwan Abdul Rahim: School of Technology Management and Logistics, Universiti Utara Malaysia, 06010 UUM Sintok Kedah, MALAYSIA
Noor Malinjasari: Universiti Teknologi MARA (UiTM) Cawangan Terengganu Kampus Dungun, 23000 Sura Hujung Dungun, Terengganu, MALAYSIA
Suzila Mat Salleh: Universiti Teknologi MARA (UiTM) Cawangan Terengganu Kampus Dungun, 23000 Sura Hujung Dungun, Terengganu, MALAYSIA
Rabiatul Adawiyah Ma'arof: Universiti Teknologi MARA (UiTM) Cawangan Terengganu Kampus Dungun, 23000 Sura Hujung Dungun, Terengganu, MALAYSIA

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 1, 2737-2744

Abstract: Effective inventory management is a cornerstone of successful supply chain operations, ensuring the alignment of stock levels with fluctuating customer demands. Central to this is demand forecasting, a process that utilizes historical data, statistical tools, and market analysis to predict future demand patterns. This paper explores the role of demand forecasting in optimizing inventory levels, reducing operational costs, and improving supply chain performance. Through a detailed review of existing literature, various forecasting techniques—including exponential smoothing, regression models, and bootstrapping approaches—are categorized and analyzed based on their functionalities and applications. Forecasting serves as a fundamental tool for optimizing inventory levels, mitigating the impact of stochastic demand rates, and minimizing associated costs in supply chain management. Key findings emphasize the significance of accurate demand forecasting in mitigating challenges posed by stochastic demand rates, market uncertainties, and extended lead times. The benefits of effective forecasting, such as enhanced inventory management, cost reduction, improved customer service, and strategic resource allocation, are outlined. Furthermore, this study underscores the importance of adapting forecasting methodologies to dynamic market conditions and integrating innovative approaches to sustain competitive advantage. The research concludes by advocating for the continuous advancement of forecasting techniques to address evolving supply chain complexities and support strategic decision-making in a competitive global market. The paper categorizes various forecasting techniques based on their applications, highlighting their significance in addressing challenges posed by fluctuating market demands and lead times. Thus, this research underscores the importance of accurate forecasting in achieving optimal inventory management and operational efficiency within complex supply chains.

Date: 2025
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