What is Demand Planning? 4 Types of Demand Reviewed - Unexpected, Seasonal, Peak, and Chase Demand

The video introduces the concept of demand and its impact on inventory control. It defines demand planning as the process of estimating how much of a good or service customers will purchase. This planning is crucial for managing inventory and preventing stock-outs.

Peak demand is controlled by organizations, often occurring due to planned sales or promotions. Companies anticipate these spikes and increase production accordingly, such as preparing for a 40% off sale.

Seasonal demand is specific to certain times of the year, like the holiday season or specific events such as Halloween. Companies plan for these predictable fluctuations, ramping up inventory for popular times like Black Friday. The video uses the inverse relationship between coffee and ice cream sales during different seasons as an example.

Unexpected demand is outside a company's control, with the 2020 pandemic and the sudden need for face masks serving as a prime example. While it can lead to increased sales, it also poses challenges for companies that lack the resources to scale production quickly, potentially causing customers to seek competitors.

Chase demand involves adjusting production and workforce levels to match fluctuations in demand. The service industry, particularly restaurants, demonstrates this by increasing staff during busy periods like weekends and reducing staff during slower weekdays.

Demand planning helps companies estimate consumer purchasing behavior, influencing inventory management. The four types of demand—peak, seasonal, unexpected, and chase—each require different strategies for effective inventory control and workforce management.