The notion that planning and forecasting are different functions deserves special mention here. Forecasting is generally used to predict (describe) what will happen (for example, to sales demand, cash flows, or employment levels) given a set of circumstances (assumptions). Planning, on the other hand, involves the use of forecasts to help make good decisions about the most attractive alternatives for the organization. Thus a forecast seeks to describe what will happen, whereas a plan is based on the notion that by taking certain action now the decision maker can affect subsequent events in a given situation, and thus influence the final results in the direction desired. For example, if a forecast shows that demand will fall in the next year, management may want to prepare a plan of action that will compensate for or reverse the predicted drop in demand. Generally speaking, forecasting and forecasts are inputs to the planning process.