Which technique can help in forecasting inventory needs?

Forecasting inventory needs is crucial for effective supply chain and inventory management. The technique of historical trend analysis and demand prediction is beneficial because it allows organizations to examine past sales data and identify patterns or trends over time. By analyzing this data, businesses can make informed predictions about future inventory requirements, aligning their stock levels with anticipated demand.

This technique employs statistical methods and predictive analytics to extrapolate trends, taking into account seasonal variations, market conditions, and consumer behavior. Consequently, it enhances inventory planning by ensuring that an organization maintains adequate stock to meet customer demands without incurring excessive holding costs. The ability to predict future demand with greater accuracy helps minimize the risk of stockouts and overstock situations, directly impacting overall operational efficiency and customer satisfaction.

In contrast, other options such as random selection of historical data do not provide structured insight; regular surveys of supplier capabilities focus on current supplier performance rather than forecast demand; and annual reviews of previous year sales only do not account for changing market dynamics or trends in demand, thus lacking the comprehensive analysis needed for effective forecasting.