Demand Forecast

Fundamental of demand
estimation/forecasting
• Demand estimation may be defined as the
process of finding values for demand in
future time periods.
• Estimation is a prediction of a future event
which is likely to happen under given
conditions.

Practical English ABUS004-3-1 Introduction

 Features

• Sales forecast
• Planning production programme
• Based on past trends and present
economic condition
• It depend on market planning
• Help in firm planning.

Practical English ABUS004-3-1 Introduction

 • Demand forecasting
• Demand estimating
• Significance of demand estimation:
• Product the required quantity
• Sales forecasting
• Control of business
• Business control

Practical English ABUS004-3-1 Introduction

 Cont…

• Inventory control
• To plan investment and employment
• Man power planning

Practical English ABUS004-3-1 Introduction

 Objectives

• Short-run forecasting
• Long-run forecasting

Practical English ABUS004-3-1 Introduction

 Factors or steps

• Identification of objectives
• Determining the nature of goods
• Selection of proper method
• Interpretation of results

Practical English ABUS004-3-1 Introduction

 Scope of demand estimation

• Period of forecasting
• Levels of forecasting
• New product
• Type of commodity

Practical English ABUS004-3-1 Introduction

 Methods of demand estimation

• Consumer survey
• Collective opinion
• Statistical methods:
• Trend projection
• Time series
• Regression

Practical English ABUS004-3-1 Introduction

 limitations

• Lack of past sales data

• Based on unrealistic assumptions
• Cost
• Change in fashion
• Careful use

Practical English ABUS004-3-1 Introduction

 Criteria of a good estimation
method
• Accuracy
• Simplicity
• Economy
• Timeliness
• Effective
• Durability
• Quickness

Practical English ABUS004-3-1 Introduction