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Econometric Method
3.Barometric Method
4. Input- Output Analysis (End-use Method)
1.Time Series analysis a. Trend Analysis i. Graphical Method ii. Least square Method
2. Econometric Method a. Regression Method i. Simple Regression Analysis ii. Multiple regression Analysis
3. Barometric Method a. Leading indicators b. Coincident Indicators c. Lagging indiactors. 4. Input Output Method.
constitute a time series. As far as demand forecasting is concerned, the variable in question will be the demand of the product overtime.
a.Trend projection.
This is a classical method of business forecasting. This method is essentially concerned with the study of
movement of variables through time. The use of this method requires a long and reliable time-series data.
Trend projection.
assumption that the factors responsible for the past trends in the variable to be projected(eg.sales and demand) will continue to play their part in future in the same manner and to the same extent as they did in
time-series.
A).Graphical Method- this is also called free hand
method.Under this method, annual sales data is plotted on a graph paper and a line/curve is drawn through the
method for forecasting demand.Fitting trend equation is a formal technique of projecting the trend in demand.
Under this method, a trend line (or curve) is fitted to the
time series data is determined either by plotting the sales data or by trying different forms of trend equations for the best fit.
Most common types of trend equations- linear and
exponential trends.
ECONOMETRIC METHOD-
REGRESSION METHOD.
It may be a simple-equation regression model or it may
REGRESSION METHOD
This is the most popular method of demand estimation. it
of one variable on the other variable.In demand forecasting, demand is estimated with the help of a regression equation wherein demand is the dependent variable and variables that affect or determine demand eg.price,advertising expenditure, consumers income etc. are called the independent variable.
independent variable eg. Price and one dependent variable eg. Demand is considered, we have a simple regression analysis.
Multiple regression analysis- when two or more
in 1930s by the National Bureau of Economic Research (NBER) of USA and since then adopted by US. for
forecasting purposes.
The basic approach of barometric technique is to
basic performance of the economy as a whole.leading series consists of indicators which move up or down
coincide roughly with and provide a measure of the current performance of aggregate economy.
They move up and down simultaneously with the level of
economic activity.
Some examples are i.GNP at constant prices. ii. Sales recorded by the manufacturing, trading and retail
sectors.
iii.rate of unemployment
method developed in recent decades is Leontiefs input output model of the economy.
This model enables a forecaster to trace the effects of an
demand for a product is forecast on the basis of a study of its quantity demanded by other industries