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What is the difference between a sales forecast and a demand forecast?
A sales forecast predicts what you expect to sell, while a demand forecast predicts what customers would have bought if nothing limited them. The two diverge when you run out of stock, cap capacity or restrict supply. Sales history understates true demand whenever a product was unavailable during the period being measured.
This matters because most businesses train forecasts on sales records. If an item was out of stock for three weeks, the zero sales in those weeks do not mean nobody wanted it, and a model that learns from them will under-order next time.
Common fixes include flagging stock-out periods, filling them with estimates from comparable periods, or excluding them from training. Sales forecasts are often used for revenue targets, while demand forecasts are better for inventory and capacity decisions.
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