What role does demand forecasting play in warehouse management?

Demand forecasting is essential in warehouse management because it directly influences how inventory is managed to meet customer needs. By accurately predicting future demand for products, warehouses can adjust their inventory levels accordingly. This means they can ensure that they have sufficient stock to meet anticipated orders without overstocking, which can lead to increased holding costs and wasted resources.

When inventory levels are aligned with anticipated customer demand, it creates a more efficient warehouse operation. This alignment helps prevent stockouts and backorders, enhancing customer satisfaction and operational efficiency. Additionally, this practice allows for more strategic purchasing decisions, optimizing the supply chain and reducing the risks associated with excess inventory.

In contrast, while demand forecasting might inform marketing strategies, assist in understanding financial health, or impact warehouse space planning, its primary role is to ensure inventory availability aligns with customer requirements, making option B the most relevant answer in the context of warehouse management.