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Poor demand forecasting can lead to stockouts and excess inventory, representing significant challenges in supply chain management. When forecasting demand inaccurately, a company may either overestimate the demand for a product, resulting in a surplus of inventory, or underestimate it, leading to stockouts.

Stockouts can frustrate customers who may seek alternative suppliers for products that are unavailable, negatively impacting customer loyalty and satisfaction. On the other hand, excess inventory not only ties up capital, but it can also lead to increased storage costs and a higher risk of inventory becoming obsolete, especially in industries with rapid product turnover.

Therefore, effective demand forecasting is crucial to maintain a balanced inventory level that meets customer needs without incurring unnecessary costs or losses. Ultimately, poor demand forecasting disrupts the supply chain's efficiency and effectiveness, making it vital to invest in accurate forecasting methods and systems.