What is a common strategy for managing seasonal inventory fluctuations?

Proactive demand forecasting is essential for managing seasonal inventory fluctuations because it allows retailers and merchandisers to anticipate customer needs based on historical sales data, market trends, and other influencing factors. By accurately predicting demand, businesses can better align their inventory levels to match anticipated sales, reducing the risk of overstock or stockouts during peak seasons. This strategy ensures that there is sufficient stock to meet customer demand without incurring excessive carrying costs associated with unsold inventory.

By employing proactive demand forecasting, companies can not only enhance customer satisfaction through better product availability but also optimize their supply chain operations. This can lead to improved financial performance, as managing inventory more effectively helps minimize waste and enables timely responses to market changes, further aiding in maintaining an efficient balance between supply and demand.