DEMAND FORECASTING

Table of Contents :

Demand Forecasting…………………………………………………….. Page 1

Brief profile of Yamaha…………………………………………………. Page 1
Demand table………………………………………………………………… Page 3
Least squares method…………………………………………………… Page 7
Biblography……………………………………………………………………. Page 11
Demand Forecasting:

Forecasting customer demand for products and services is

a proactive process of determining what products are needed
where, when, and in what quantities. Consequently, demand
forecasting is a customer–focused activity.

Demand forecasting is also the foundation of a company’s

entire logistics process. It supports other planning activities such
as capacity planning, inventory planning, and even overall
business planning.

Following on from what is discussed, I would be

forecasting the demand for Yamaha Bikes based on one of the
techniques for demand forecasting.

Brief Profile of Yamaha India :

Yamaha made its initial foray into India in 1985.

Subsequently, it entered into a 50:50 joint venture with the
Escorts Group in 1996. However, in August 2001, Yamaha
acquired its remaining stake becoming a 100% subsidiary of
Yamaha Motor Co., Ltd, Japan (YMC). In 2008, YMC entered into
an agreement with Mitsui & Co., Ltd. to become a joint investor in
the motorcycle manufacturing company "India Yamaha Motor
Private Limited (IYM)".
IYM operates from its state-of-the-art-manufacturing
units at Surajpur in Uttar Pradesh and Faridabad in Haryana and
produces motorcycles both for domestic and export markets. With
a strong workforce of more than 2000 employees, IYM is highly
customer- driven and has a countrywide network of over 400
dealers. Presently, its product portfolio includes MT01 (1670 cc),
YZF-R1 (998 cc), the all new YZF-R15 (150 cc), FZ16, FZ-S,
Fazer (153cc), Gladiator Type SS & RS (125 cc),
 Gladiator Graffiti (125cc), G5 (106 cc), Alba (106 cc) and
Crux (106 cc)

YEAR DEMAND( IN LAKHS)

2005 135986
2006 152785
2007 118848
2008 116388
2009 214536

2009* Estimated demand based on the sale of motorcycles till

June 2009
 The reason for the slump in Demand for Yamaha
Motorcycles in India in the year 2007 and early 2008 is due to

• None of their 4 stroke models have been successful in creating

impact in the market strongly.

• The 125 C.C Gladiator though a good bike had not caught
the imagination of the consumers.

• Dealerships which in some places could not match the

standards set by the swanky dealerships of the market leaders
Hero Honda, Bajaj Auto, TVS Motos and Honda Motorcycle and
Scooters.

REASONS FOR UPWARD TREND IN 2009:

• Launched what they are synonymous for – Power. Increase in

sales due to launch of the macho stud FZ series of bikes and the
technical gem R15.

• Launch of Suave Yamaha dealerships complete with racing

kits, helmets to create a racing atmosphere.
Demand Forecasting for Yamaha bikes using the least
squares method:

What is least Squares method:

Least squares estimation is a powerful tool to estimate the

Coefficient of a linear function. It is based on the minimization of
squared deviations between the best fitting line and the original
observations given. In this method (also regarded as the
algebraic method), we fit the data on demand and time in the
form of equations and then project the demand for the future
period. These equations are termed as “normal equations” and
the task of least squares method is to find out the values of the
coefficients in these equations.
Now, looking at the data from 2005 to 2009, we can predict the
demand from ’10 to ’14.
RAW DATA
YEAR DEMAND (IN LAKHS)
2005 135986
2006 152785
2007 118848
2008 116388
2009* 214536

YEAR DEMAND DEVIATIONS X^2 XY

FROM 2005
2005 135786 -2 2 271972
2006 152785 -1 1 152785
2007 118848 0 0 0
2008 116388 1 1 116388
2009 214536 2 2 429072
N=5 Y=738543 0 10 XY=970217

The equation for linear trend is given as Y = a + bx. In order to

solve this trend equation, we need to solve the following normal
equations

Y = NA + BX

XY = AX + BX2

Solving these equations, we get,

A = 147708
B = 97021
Hence, the equation for linear trend is 147708 + 97021X
Let us calculate the trend values based on the basis of this
equation :

YEAR EQUATION EXPECTED DEMAND IN

LAKHS
2010 147708+97021(3) 438771
2011 147708+97021(4) 535792
2012 147708+97021(5) 632813
2013 147708+97021(6) 729834
2014 147708+97021(7) 826855

Using the least squares method, we have forecasted the future

demand for Yamaha motorcycles in India , however, this is
subject to various factors like
• Competitors strategy like pricing, new models etc

• Economic conditions

• Demand for motorcycles as a whole

http://www.scribd.com/doc/18490599/Rough-Demand-
Forecasting