Introduction

Demand forecasting (Manpower Forecasting) is the process of

estimating the future numbers of people required and the likely skills and

competences they will need. Forecasting human resource demand is the

process of estimating the future human resource requirement of right quality

and right number. Potential human resource requirement is to be estimated

keeping in view the organisation's plans over a given period of time.

Analysis of employment trends; replacement needs of employees due to

death, resignations, retirement termination; productivity of employees;

growth and expansion of organization; absenteeism and labour turnover are

the relevant factors for human resourced forecasting.

Concept of Demand Forecasting

It is an activity used in order to estimate the quantity of a certain

product or service that the consumers will be willing to purchase.

Demand forecasting encompasses the usage of both informal methods

(educated guesses) and quantitative methods (historical sales data or

data from test markets). Demand forecasting is used by production

houses in order to make various decisions such as pricing decision,

future capacity requirements, or decisions to advance a new product

or to enter a new product etc. It is a proactive process of determining

 what products are needed where, when and in what quantities;

demand forecasting is therefore a customer-focused activity. Demand

forecasting is the foundation of a company’s entire logistics process.

At a more practical level, forecasting demand involves determining

the numbers and kinds of personnel that an organization will need at some

point in the future. Most managers consider several factors when forecasting

future personnel needs. The demand for the organization’s product or service

is paramount. Thus, in a business, markets and sales figures are projected

first. Then, the personnel needed to serve the projected capacity are

estimated. There are two methods of demand forecasting:

 Passive forecasts: where the factors being forecasted are

assumed to be constant over a period of time and changes are

ignored.

 Active forecasts: where the factors being forecasted are taken as

flexible and are subject to change.

Importance of demand forecasting to a manager

The main function of today’s managers is to ensure the clear

analyzing and identifying the need for and availability of human

resources so that the organization can meet its intended goals and

objectives at a required time.

 Demand forecasting is an essential for maximization of profits in

business. Demand forecasting makes it easy for a manager to optimize

revenue along with a timely replacement of goods and products.

In organization the head of the business is Manager, where by the manager

is the person who responsible for controlling administering all or part

of a company or similar organization. Accurate demand forecasting is

essential for a firm to enable it to produce the required quantities at

the right time and arrange well in advance for the various factors of

production, such as, raw materials, equipment, machine accessories,

labor, buildings, etc. demand forecasting is used by the manager for

various other reasons which are outlined below:

 Appropriate production scheduling.

 Reducing costs of purchasing raw materials.

 Determining appropriate price policy

 Setting sales targets and establishing controls and incentives.

 Evolving a suitable advertising and promotional campaign.

 Forecasting short-term financial requirements.

 Purposes of long-term forecasting

  Planning of a new unit or expansion of an existing unit.

 Planning long-term financial requirements.

 Planning manpower requirements.

 Demand forecasts of particular products form guidelines for

related industries (e.g., cotton and textiles).

 Demand forecasting techniques

The demand forecasting method is not one, which is 100% accurate. A

combination both quantitative and qualitative methods, reduce the risk of

making mistakes which may be a huge liability for production houses.

Quantitative methods: this is based on statistical data that is acquired

by the business in order to formulate a near perfect demand forecast.

1. Discrete Event Simulation: the operation of a system is

represented as a chronological sequence of events. Each event

occurs at an instant in time and marks a change of state in the

system.

2. Extrapolation: is the process of constructing new data points

outside a discrete set of known data points.

3. Quantitative analogies: A business or financial analysis

technique that seeks to understand behavior by using complex

mathematical and statistical modeling, measurement and research.

By assigning a numerical value to variables, quantitative

analysts try to replicate reality mathematically.

4. Rule-based forecasting: integrates statistics and domain

knowledge to deliver more accurate forecasting techniques. RBF

is an expert system that uses features of time series to select and

weight extrapolation techniques.

5. Data mining: branch of computer science and artificial

intelligence is the process of extracting patterns from data. Data

mining is seen as an increasingly important tool by modern

business to transform data into business intelligence giving an

informational advantage. It is currently used in a wide range of

profiling practices, such as marketing, surveillance, fraud

detection, and scientific discovery.

6. Causal models: is an abstract model that uses cause and effect

logic to describe the behavior of a system.

7. Segmentation: Market segmentation is a concept in economics

and marketing. A market segment is a sub-set of a market made

 up of people or organizations with one or more characteristics

that cause them to demand similar product and/or services based

on qualities of those products such as price or function.

 Qualitative methods: takes into account the changes in human

trends and therefore are based on the opinion of people that make up a

particular market segment. This method also holds a great value for

expert opinion.

1. Delphi technique: involves a group of experts who eventually

develop a consensus. They usually make long-range forecasts for

future technologies or a future sale of a particular product.

2. Sales force composite: sales persons are good source of

information with regard to customer’s future intentions to buy a

product.

3. Customer surveys: by using surveys, a firm can base its demand

forecasts on the customers purchasing plans.

4. Executive committee method: develop long-medium forecasts by

asking a group of knowledgeable executives their opinion with

regard to future values of the items being forecasted. The negative

aspect of this that the presence of a powerful member in the group

 will hinder he reaching of a consensus.

5. Game theory: is a branch of applied mathematics that is used in

the social sciences, most notably in economics. Game theory

attempts to mathematically capture behavior in strategic

situations, or games, in which an individual's success in making

choices depends on the choices of others.

6. Judgmental bootstrapping: is a type of expert system. It translates

an expert’s rules into a qualitative model by regressing the

expert’s forecasts against the information that he used.

Bootstrapping models apply an expert’s rules consistently.

7. Conjoint analysis: is a statistical technique used in market

research to determine how people value different features that

make up an individual product or service. The objective of

conjoint analysis is to determine what combination of a limited

number of attributes is most influential on respondent choice or

decision-making.

Conclusion
Management function begins with forecasting. It is the scientific process of

looking forward which is based on past performance, current analysis and

future trends. Planning is based on forecasting.

Every company undertakes the process of forecasting, either on its own or

takes note of general economic forecasts made by various competent

authorities. Some companies also have consultants for this purpose.

REFERENCES

GUPTA. C.B. (2006). Human Resource Management 7THEd, Sultan Chand

and sons Educational Publishers: New Delhi

Robinns,S.P. (1982).PERSONNEL, The management of Human Resource

2nd Ed.Prentice-Hall,United State Of America

BEARDWELL. I ,CLAYDON. T and HOLDEN. L.(1994) Human

Resources Management

Gupta, C.B. (2009).MANAGEMENT THEORY AND PRACTICE. New

Delhi .Sultan Chand&Sons.