uemand lorecasLlng

W "uemond forecostinq is predictinq future

demond for o product under qiven conditions
for o porticu/or firm"
W L ls Lhe esLlmaLed rupees or unlL sales for a
speclflc fuLure Llme perlod based on a
proposed markeLlng plan and an assumed
markeL envlronmenL
4;
SIGNIIICANCL CI DLMAND ICkLCAS1ING
W Short term forecast purposes
W 9urchaslng raw maLerlal
W SeLLlng sales LargeL
W producLlon plannlng
W lnvenLory plannlng
W proflL plannlng
W SulLable adverLlslng
W lorecasLlng shorL Lerm flnanclal requlremenLs
SIGNIIICANCL CI DLMAND
ICkLCAS1ING
W |ong term forecast purposes
W 9lannlng new unlL or expanslon of exlsLlng
unlL
W 9lannlng long Lerm flnanclal requlremenL
W plannlng man power requlremenL
Scope of Demand Iorecast|ng
W 9erlod of forecasL
W Levels of forecasL
W Ceneral purpose or Speclflc purpose forecasL
W lorecasL of esLabllshed producL or new producL
W 1ypes of commodlLy for whlch forecasL ls Lo be underLaken
1ypes of sa|es forecast|ng
W ShorL Lerm
W Long Lerm
W eve|s of forecast|ng
W ,acro level
W ndusLry level
W llrm level
W 9roducL level
4;
S1LS IN DLMAND ICkLCAS1ING
W denLlflcaLlon of ob[ecLlves
W ueLermlne naLure of goods under
conslderaLlon
W SelecL a proper meLhod of forecasLlng
W nLerpreLaLlon of resulL
1echnlques of demand forecasLlng
1echnlques of demand forecasLlng
W CompleLe enumeraLlon meLhod
AlmosL all poLenLlal users of Lhe producL are
conLacLed and are asked abouL Lhelr fuLure
plan of purchaslng Lhe producL ln quesLlon
1he quanLlLles lndlcaLed by consumers are
added LogeLher Lo obLaln Lhe probable
demand for a producL
1echnlques of demand forecasLlng
W Sample Survey ,eLhod
L ls used when populaLlon of Lhe LargeL markeL ls very
large Cnly sample of poLenLlal users ls selecLed for
lnLervlew Cn Lhe basls of Lhe lnformaLlon obLalned Lhe
probable demand may be esLlmaLed Lhrough Lhe followlng
formula
u9 Pr/Ps (P Au)
u9 probable demand forecasL
Pr no of households reporLlng demand for Lhe producL
Ps no of households surveyed or sample households
P census no of households from Lhe relevanL markeL
Au average expecLed consumpLlon by reporLlng household
1echnlques of demand forecasLlng
W Lnd use ,eLhod
1hls ls slgnlflcanL speclally ln case of forecasLlng
demand for lnpuLs n Lhls meLhod
Lechnologlcal sLrucLural and oLher changes
LhaL mlghL lnfluence Lhe demand are Laken
lnLo accounL ln Lhe very process of esLlmaLlon
Cenerally lL ls calculaLed ln sLages
1 1o ldenLlfy and llsL all Lhe posslble users of
producL ln quesLlon
1echnlques of demand forecasLlng
W Lnd use ,eLhod (conLlnued)
2 llxlng sulLable Lechnlcal norms of
consumpLlon of producL under sLudy
3 AppllcaLlon of norms
4 AggregaLe Lhe producLwlse or unlLwlse
conLenL of lLem for whlch Lhe demand ls Lo
be forecasLed
1echnlques of demand forecasLlng
W Cplnlon 9oll ,eLhod
L alms Lo collecL oplnlon of Lhose who are
supposed Lo possess knowledge of Lhe markeL
eg sales execuLlves markeLlng experLs
consulLanLs eLc
1echnlques of demand forecasLlng
W LxperL Cplnlon ,eLhod
llrms havlng a good neLwork of sales
represenLaLlves can puL Lhem on work of
assesslng Lhe demand for LargeL producL ln
Lhe areas reglons or clLles LhaL Lhey represenL
1echnlques of demand forecasLlng
W uelphl ,eLhod
L consolldaLes Lhe dlvergenL experL oplnlons
and arrlves aL a compromlse esLlmaLe of
fuLure demand under Lhls meLhod Lhe
experLs are provlded lnformaLlon on esLlmaLes
of forecasLs of oLher experLs along wlLh
underlylng assumpLlons 1he experLs may
revlse Lhelr own esLlmaLes Consensus of
experLs leads Lo flnal forecasL
1echnlques of demand forecasLlng
W ,arkeL SLudles and experlmenLs
n Lhls Lhe markeL sLudles and experlmenLs are
carrled ouL Lo assess Lhe consumer's
behavlour under acLual Lhough conLrolled
markeL condlLlons under Lhls flrms flrsL selecL
some areas of represenLaLlve markeLs 1hen
Lhey carry ouL markeL experlmenLaLlon by
changlng prlces and oLher conLrollable
varlables
1echnlques of demand forecasLlng
W ,arkeL SLudles and experlmenLs
AfLer such changes are lnLroduced subsequenL
changes ln demand are recorded Cn Lhls basls
elasLlclLy coefflclenL ls calculaLed 1hese
coefflclenLs are Lhen used along wlLh Lhe
varlables of demand funcLlon Lo assess Lhe
fuLure demand for Lhe producL
1echnlques of demand forecasLlng
W SLaLlsLlcal ,eLhods
1hese are consldered as superlor meLhod
because of followlng reasons
1 1he elemenL of sub[ecLlvlLy ls mlnlmum
2 ,eLhod of esLlmaLlon ls sclenLlflc
3 LsLlmaLes are relaLlvely more rellable
4 LsLlmaLlon lnvolves smaller cosLs
1echnlques of demand forecasLlng
W 1rend 9ro[ecLlon ,eLhods
L ls concerned wlLh sLudy of movemenL of
varlables wlLh Llme L requlres long and
rellable Llme serles daLa L comprlses of
1 Craphlcal meLhod
2 llLLlng Lrend equaLlon or leasL square
meLhod
3 8ox !enklns meLhod
1echnlques of demand forecasLlng
W Craphlcal meLhod
under Lhls meLhod annual sales daLa ls ploLLed
on a graph paper and a llne ls drawn Lhrough
Lhe ploLLed polnLs 1hen a free hand llne ls so
drawn LhaL Lhe LoLal dlsLance beLween Lhe
llne and polnL ls mlnlmum
1echnlques of demand forecasLlng
W llLLlng Lrend equaLlon or leasL square
meLhod
under Lhls a Lrend llne (or curve) ls flLLed Lo Lhe
Llme serles sales daLa wlLh Lhe ald of
sLaLlsLlcal Lechnlques 1he form of Lrend
equaLlon LhaL can be flLLed Lo Lhe Llme serles
daLa ls deLermlned elLher by ploLLlng Lhe
sales daLa or by Lrylng dlfferenL forms of
Lrend equaLlons for besL flL
1echnlques of demand forecasLlng
W 8ox !enklns meLhod
L ls used only for shorL Lerm pro[ecLlons and
predlcLlons n Lhls Lhe flrsL sLep ls Lo ellmlnaLe
Lrend from Llme serles daLa 1hen sLaLlonary
Llme serles ls creaLed 1hen lL ls assured LhaL
Lhere ls seasonallLy ln sLaLlonary Llme serles
llnal sLep ls Lo use Lhe models Lo predlcL sales
ln lnLended perlod
1echnlques of demand forecasLlng
W 8aromeLrlc meLhod of forecasLlng
1he meLhod whlch meLeorologlsL use ln weaLher
forecasLlng ld belng used here lollowlng Lhe loglc
of Lhls meLhod many economlsLs use economlc
lndlcaLors as a baromeLer Lo forecasL Lrends ln
buslness acLlvlLles 1he baslc approach ls Lo
consLrucL an lndex of relevanL ecooomlc loJlcotots
and Lo forecasL fuLure Lrends on Lhe basls of
movemenL ln Lhese lndlces
1echnlques of demand forecasLlng
W 8aromeLrlc meLhod of forecasLlng (conLlnued)
1he lndlcaLors used ln Lhls meLhod are classlfled as
a) Leadlng lndlcaLors new order for sales corporaLe
proflLs afLer Lax lndex of neL buslness lnvesLmenL
b) ColncldenLal lndlcaLors no of employees ln non
agrlculLural secLor raLe of unemploymenL eLc
c) Lagglng lndlcaLors labor cosL per unlL of
manufacLured ouLpuL ouLsLandlng loans eLc
1echnlques of demand forecasLlng
W 8aromeLrlc meLhod of forecasLlng (conLlnued)
ulffuslon lndex lL ls Lhe percenLage of rlslng
lndlcaLors L copes up wlLh problem of dlfferlng
slgnals glven by Lhe lndlcaLors 1he scores alloLLed
Lo varlous lndlcaLors are 1 Lo rlslng serles Z Lo
consLanL serles and 0 Lo falllng serles 1he lndex ls
obLalned by Lhe raLlo of number of lndlcaLors ln
parLlcular class movlng up or down Lo Lhe LoLal
number of lndlcaLors ln LhaL group
1echnlques of demand forecasLlng
W LconomeLrlc meLhods of forecasLlng
1 8egresslon meLhods Pere economlc Lheory ls
employed Lo speclfy Lhe deLermlnanLs of demand
and Lo deLermlne Lhe naLure of relaLlonshlp
beLween Lhe demand for a producL and lLs
deLermlnanLs SLaLlsLlcal Lechnlques are employed
Lo esLlmaLe Lhe values of parameLers ln Lhe
esLlmaLed equaLlon
a) 8lvarlaLe regresslon Lechnlque
b) ,ulLl varlaLe regresslon Lechnlque
1echnlques of demand forecasLlng
W LconomeLrlc meLhods (conLlnued)
2 SlmulLaneous LquaLlons ,odel L enables
conslderlng slmulLaneous lnLeracLlon beLween
dependenL and lndependenL varlables 1hls ls
compleLe and sysLemaLlc approach Lo forecasLlng
a) CompleLe model ls developed and assumpLlons are
speclfled regardlng varlables lncluded ln model
W Lndogenous varlables
W Lxogenous varlables
1echnlques of demand forecasLlng
b) 1o collecL daLa on boLh endogenous exogenous
varlables
c) 1o esLlmaLe Lhe model Lhrough some approprlaLe
meLhod
d) llnally Lhe model ls solved for each endogenous
varlable ln Lerms of exogenous varlable 1hen by
plugglng Lhe values of exogenous varlables lnLo Lhe
equaLlons Lhe ob[ecLlve value ls calculaLed and
predlcLlon ls made