Demand forecasting : It is estimation of future demand. It can not be hundred percent precise.

But it gives a reliable approximation regarding possible outcome with a reasonable accuracy. Demand forecasting is done at 1 : Micro level : Individual firm makes demand forecasting. 2 :Industry Level : It means demand estimate for a product of industry. 3 : Macro Level : It refers to aggregate demand for Industrial output by the nation as a whole.

Why demand forecasting : Production planning. Sales forecasting

Control of business
Inventory control Growth and long term Investment pro gramme

Stability
Economic Planning and policy making.

For business decision making purpose firm may undertake short term and long term forecasting. Short term forecasting : Why? 1 : Evolving sales policy 2 : Determining Pricing policy 3 : Evolving a purchase policy 4 : fixation of sales target 5 : determining short term financial planning .

Long Term Forecasting : Why? 1 : Business planning 2 : Manpower planning 3 : Long term financial planning .

Method of Demand forecasting : 1 : Expert opinion method 2 : Opinion poll or market research method 3 : Survey of Spending Plans 4 : Economic indicators 5 . Projections 6 : Econometric models Export opinion method : There are two Important methods a) Jury of Executive Opinion b) Delphi Method .

Process is carried out till differences in answers are narrowed down. Delphi Method : In this method panel of expert is form but it does not meet . . But the danger is panel member who is not knowledgeable but persuasive may influence result to a great extent. The process is carried out by sequential series of questions and answers. Members are from different functional areas within the corporations are from different corporations.Jury of executive opinion : Forecast are generally generated by group of corporate executives assemble together. This is a successful technique.

. Market research is closely related to opinion polling. It provides lot more information about why a consumer is buying or not buying. Choice of sample is of utmost importance because the use of an unrepresentative sample may give completely misleading results.Opinion Poll and Market Research : Rather than soliciting expert opinion poll survey a population whose activity may determine future trends. what characteristics a consumer thinks are most important etc.

Economic Indicator : to make correct forecasting it is very much essential to identify correct indicator whose direction is able to predict future trend of demand.Survey of spending plan : The use of survey of spending plan is quite similar to opinion poll and market research and the method of data collection are also quite alike. . However data collected is of macro type that is related to whole economy.

There are three types of indicators 1 ) Leading: It tells us where we are going.g. industrial Production etc. .g. Personal Income. stock market index. e. e. Sales. money supply etc. Building permits.g change in labour cost per unit of output. 3 ) Lagging : It indicates where we have been. e. ratio of manufacturing and trade inventories to sales. 2 ) coincidence : It indicates where we are.loans outstanding.

It is simply assume that past trends will continue. Time series projections using least squares technique . Following are projection techniques : Compound growth rate Visual time series projections Time series projections .Projections : Past data is projected into future without taking into consideration reasons for the change.

Constant compound growth rate : the constant growth rate it is necessary to go from the amount in the first year to the amount in the last year. i – Growth rate n – No of years. . Formula In this case first and last years of data is required and to calcul problem is solved in the same way as if we were to calculate h grows in a certain numbers of years at a constant rate of intere ( 1 + i ) to power n = E / B E. B – first year's amount.Last year's amount. This much a specific sum deposited in an interest bearing account that is compounded annually.

Time series analysis : .Visual time series Projections .Past data is plotted on a graph and most fitted curve is plotted.

Q 0 1 2 3 4 5 6 7 8 9 10 TC 150 TFC TVC AC x 300 176 AFC AVC x x MC x 280 72 500 140 127 1099 146 210 .

Q 1 : Find the average cost when Q = 2 Q 2 : Find total cost when Q = 4 Q 3 : Find marginal cost when Q = 6 Q 4 : Find total variable cost when Q =10 Q 5 : Find average variable cost when Q = 8 .

1 : Q = 100 + 50L + 50K 2 : Q = 50L + 50 K = 50LK 3 : 50L² + 50K ² 4 : Q = 100L½ K½ .Following are different algebraic expression of production functions. Decide whether each one has constant. increasing or returns to scale.

4 15 152.42 21.75 137.5 112.66 146 167.37 162.66 16.4 MC x 150 130 98 72 50 190 199 210 215 210 .Q 0 1 2 3 4 5 6 7 8 9 10 TC TFC TVC 150 150 0 300 150 150 430 150 280 528 150 378 600 150 450 650 150 500 840 150 690 1039 150 889 1249 150 1099 1464 150 1314 1674 150 1524 AC AFC AVC x x x 300 150 150 215 75 140 176 50 126 150 37.12 18.42 127 156.5 130 30 100 140 25 115 148.

Q 0 1 2 3 4 5 6 7 8 9 10 TC 120 TFC TVC AC x 265 161 AFC AVC x x MC x 264 85 525 120 97 768 97 127 .

Q 2 – Find Marginal cost of fourth unit of out put. Q 3 – Find total fixed cost of 125th unit. Marks will not be given with out working. Q 4 – find total cost of zero unit of out put. . Q1 – Find out Average cost for tenth unit of out.1Q³ TC = 100 + 60Q + 3Q² TC = 100 + 60Q Answer the following Question for all the functions.Cost functions are give as follows TC = 100 + 60Q – 3Q² +0.

25Q². Q 2: The total cost function of a firm is estimated to be TC = 200 – 6Q + 10Q². If out put is 18 units calculate profit. . 60 calculate the marginal revenue earned from the sale of the product. If current output is 10 units calculate marginal cost .Q 1 : For a product the demand function is given as Q = 140 – 2P If the product is sold at a price of Rs. The total revenue is TR = 50Q – 0. The total cost function of a firm is estimated to be TC = 150 +12Q.

Calculate the maximum possible average product. Find out the number of labour after which marginal product becomes negative. Q : The production function of Kalyani co for labour is TP = 30L – 1. . Q : The production function of a company for labour is TP = 80L² – L³ calculate maximum possible average product of labour.5 L ².Q : The production function of Neeraj tool is TP = 80L² – L². Q : The cost function of a company i s AC = 200|Q + 40 + 8Q calculate the total variable cost of the firm at 25 units of output.

What is the price below which the firm has to shut down its operation in the short run. Q : For a monopoly firm demand function is P = 20 – 4Q.80Q² +1900 What is the possible average cost. Is TC = 200+8Q + 2Q².Q . 48. Calculate average revenue if it sells four units of output. Q : The cost function of Sudha Ltd. The firm is a perfectly competitive firm and is selling the product at Rs. Q : A firm operating in a perfectly competitive market has an average variable cost function = 800 – 80Q +8Q ². The long run cost function of a firm is TC = Q³ . If out produced is 10 units calculate profit earned. .

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