discussion

Demand Forecasting Exercise 
 for Summer Widgets

Safety Stock

Working Stock

Average Demand

Seasonal Demand

EOQ and Demand Adjustments

EOQ

• Boxes are the economic order quantity for the item from suppliers • This ensures the most cost-efficient

order for both price and delivery time

• Blue line is steady-state seasonal demand • Red line indicates that a sale is planned

just prior to peak season • Yellow line is the fallout from poor

publicity about the health hazards of the product, which are later debunked