Business Economics

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 A forecast is a method of estimation of a situation in the
future.
 Demand forecast is an estimation of demand of the
product for a future period.
 It helps in production planning, factor planning,
inventory(stock) planning and profit estimation.
 Methods to forecast demand are categorized into two
types of methods as Survey method and Statistical
methods.
Measures of Demand Forecasting
 Survey Methods
1) Expert’s opinion survey :-
Based on the opinion of experts dealing with same or similar
products.
• They are able to predict the sales of the given product in future.

These experts are generally salesman, sales managers, marketing

managers, retailers and wholesalers.
• It is time saving, simple and inexpensive.
• It can be biased and opinion given can be personal and based on
2) Delphi Method :-
It is a variant of the Experts opinion method.
• Generally, questions are asked to a group of experts to reach an
uncertain conclusion.

At times a group of experts are brought together and

are asked to comment and think on each others
opinion to reach to a conclusion.
• It generates a structural opinion rather than unstructured opinion.

It allows the forecaster to be sure and he can put all

the problems to the experts at one time.
• It can be time consuming and costly.
3) Consumer Survey method :-
In this method Demand forecasts are made through a survey of consumer’s intentions.
It is also known as the most direct method to forecast demand. There are 3 methods:-

Complete enumeration Sample Survey method. End-use method.

method.

Complete survey of all the Collects data from Demand is forecasted on

potential customers. selected customers. basis of survey by its
users. (CONSUMERS)

Are asked for the A sample of customers Exact review regarding

willingness to purchase. are asked several product can be obtained
questions. from the end user.
Time Consuming and Less tedious and costly/ Provides use wise or
costly/ no proper can be sampling error/ sector wise forecasting.
disclosure of true depends on coopoeration
preferences
 4) Market Experiment :-
Under this method, market experiments are conducted to generate demand
forecasts. There are two methods (a) Actual & (b) Simulated.
 Actual Market Experiment :-
It is conducted in the actual market place and it is very useful as it
gives an overview about real market structure. But competitors can bring
out change in the survey by changing determinants of their products.
 Simulated Market Experiment :-
Simulated market experiment is also called as consumer clinics. They
consumers are given money and are asked to buy from simulated stores
to study the resuts.