Bea Luisa De Chavez

1BSA-ABM4

Assignment Nos. 5
Estimating and Forecasting Demand
Please answer the following questions and submit on the deadline date.

1. Is it necessary to follow the steps in demand forecasting. Why or Why Not? Please
support your answer with examples.

> What is demand forecasting? A corporation faces numerous internal and external
dangers, including fierce competition, technology failure, worker unrest, inflation,
recession, and shifting governmental regulations. Therefore, the majority of an
organization's business decisions are made under risky and unclear situations. A
business can decrease the negative effects of risks by forecasting the market or
sales potential for its products and services in the future. A systemic technique
called demand forecasting involves estimating anticipated demand for the products
and services of an organization under a variety of unpredictable and competing
forces. Demand has a major impact on how an organization is managed. It enables
a business to manage the risks associated with its operations and to reach
important business choices. Demand forecasting also provides information on the
company's decisions on expansion and capital investments. Is it vital to follow the
demand forecasting process since it will aid the firm in making decisions. Such
predetermined goals are the starting point for every company unit. To reach these
goals, demand forecasting is helpful. A business makes an assessment of the
market's current demand for its products and services and then moves forward to
accomplish the goals specified. For instance, a business sets a goal of selling
50,000 of its products. In such a circumstance, the corporation will conduct market
forecasting for its products. The organization would take corrective action if there
was little demand for the company's products in order to meet the target By
predicting expenses and estimating revenues, it plays a crucial part in budgeting.
Additionally, it can aid in budgeting for the business because poor demand
forecasting practices by economists could lead to poor business judgments.

2. Cite business scenarios on the limitations and possibilities of demand forecasting

in decision-making. Explain.

> The first restriction of demand forecasting is shifts in customer tastes, fads, and
other factors. In the case of a consumer product, the organization's sales will be
impacted by changes in consumer desires, preferences, fashion, and style.
Customers must like the product for it to become well-liked and generate more
sales. Otherwise, the company wouldn't be able to meet its projections for revenue.
Management must periodically adjust its revenue predictions, taking into
consideration the demands and preferences of customers, in order to overcome
this challenge. For instance, off-shoulder tops were in style for women until crop
tops and fitted tops became popular. Demand forecasting cannot predict this
change. Lack of historical data comes next. It is particularly challenging to predict
the appropriate production sales figures for few goods because there is no prior
sales history. In these circumstances, management simply must rely on such
speculation. Another one of the constraints is anticipated expansion. It is extremely
difficult to maintain a constant pace of growth over a lengthy period of time. The
likely pace of increase should be taken into account when generating revenue
predictions. The final restriction I am aware of is psychological considerations. It is
challenging to forecast the psychological factors that influence consumers. They
could abruptly switch from being upbeat to being concerned about the future. For
instance, a rumor of an impending conflict can result in a spike in demand for
consumer items.