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But it gives a reliable approximation regarding possible outcome with a reasonable accuracy. Demand forecasting is done at 1 : Micro level : Individual firm makes demand forecasting. 2 :Industry Level : It means demand estimate for a product of industry. 3 : Macro Level : It refers to aggregate demand for Industrial output by the nation as a whole.
Control of business
Inventory control Growth and long term Investment pro gramme
Stability
Economic Planning and policy making.
Jury of executive opinion : Forecast are generally generated by group of corporate executives assemble together. Members are from different
Projections :
Past data is projected into future without taking into consideration reasons for the change. It is simply
Constant compound growth rate : the constant growth rate it is necessary to go from the amount in the first year to the amount in the last year. This much a specific sum deposited in an interest bearing account that is compounded annually. Formula
In this case first and last years of data is required and to calcul
( 1 + i ) to power n = E / B
E- Last year's amount, B first year's amount, i Growth rate n No of years.
Visual time series Projections - Past data is plotted on a graph and most fitted curve is plotted. Time series analysis :
Q 0 1 2 3 4 5 6 7 8 9 10
TC 150
TFC
TVC
AC x 300 176
AFC AVC x x
MC x
4 : Q = 100L K
Q 0 1 2 3 4 5 6 7 8 9 10
TC TFC TVC 150 150 0 300 150 150 430 150 280 528 150 378 600 150 450 650 150 500 840 150 690 1039 150 889 1249 150 1099 1464 150 1314 1674 150 1524
AC AFC AVC x x x 300 150 150 215 75 140 176 50 126 150 37.5 112.5 130 30 100 140 25 115 148.42 21.42 127 156.12 18.75 137.37 162.66 16.66 146 167.4 15 152.4
Q 0 1 2 3 4 5 6 7 8 9 10
TC 120
TFC
TVC
AC x 265 161
AFC AVC x x
MC x
Cost functions are give as follows TC = 100 + 60Q 3Q +0.1Q TC = 100 + 60Q + 3Q TC = 100 + 60Q Answer the following Question for all the functions. Q1 Find out Average cost for tenth unit of out. Q 2 Find Marginal cost of fourth unit of out put.
the product.
Q 2: The total cost function of a firm is estimated to be
Q : The production function of Neeraj tool is TP = 80L L. Calculate the maximum possible average product. Q : The cost function of a company i s AC = 200|Q + 40 + 8Q calculate the total variable cost of the firm at 25 units of output.
Q ; The long run cost function of a firm is TC = Q - 80Q +1900 What is the possible average cost. Q : The cost function of Sudha Ltd. Is TC = 200+8Q + 2Q. The firm is a perfectly competitive firm and is selling the product at Rs. 48. If out produced is 10 units calculate profit earned.