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MBA-CM - ME - Lecture 6 Demand Forecasting
MBA-CM - ME - Lecture 6 Demand Forecasting
Demand Analysis
What is market potential for any new product? How much quantity the product would be demanded or sold? What are the factors that influence its quantity demanded?
Hence, the importance of demand analysis for the managers can be briefly stated in two points:
It provides insights necessary to effectively manipulate demand It helps forecast sales and revenues
2
Demand Forecasting
Uncertainty in business environment makes decision making difficult & critical. Forecasting is a critical tool for scientific decision making process in any business. Forecasts help managers by reducing some of the uncertainties, thereby enabling them to develop more meaningful plans. A forecast is a quantitative estimate (set of estimates) about the likelihood of future events, which is developed on the basis of past & current information. In other words, a Forecast is a statement about the future value of a variable, such as demand.
Steps in Forecasting
1.
Identification of objective: It is necessary to be clear about what one wants to get from the forecast.
2.
Determining the nature of goods under consideration: Different categories of goods like consumer goods, durables and non-durables, have their own characteristic and distinct demand patterns.
3.
Types of Data
1. Time-series data refers to a time sequence of events with a specified
interval of time
2.
Cross-section
data represent
a snapshot
of many different
3.
Panel data refers to the cross-section data with the same sample at