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Vibhor AgrawalVibhor Agrawal

DEMAND FORCASTING

Demand forecasting is predicting the future demand for firm’s product.

Demand forecasting helps in following areas:-

1. Planning and scheduling production.2. Acquiring inputs.3. Making provision for finances.4. Formulating pricing strategy.5. Planning advertisement.

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Steps in demand forecasting

Specifying the objective. Determining the time perspective. Making choice of method for demand

forecasting. Collection of data and data adjustment. Estimation and interpretation of results.

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Techniques of demand forecasting.

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Survey Statistical

Consumer Opinion poll

1.Complete Enumeration

• Sample Survey• End use Method

1. Expert Opinion2. Delphi Methods

3. Survey ofManagerial Plans

4. Market Experiment

1 Trend Projection

Method2 Barometric

Method.3 Econometric

Method.

Techniques of demand forecasting.

Consumer survey method- Direct interviews-1. Consumer Survey Method – Direct Interviewsa.Complete enumerationb.Sample surveyc.End-use method

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1.Complete enumeration:-1. In this, almost all the potential users of

the product are contacted and are asked about their future plan of purchasing the product in question

2. The quantity indicated by the consumers are added together to obtain the probable demand for the product.

DF= ID1+ID2+……..+IDn

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2.Sample survey Under this , only a sample of potential consumers

or users is selected for interview. Consumers to be surveyed are selected from the

relevant market through a sampling method. Method of survey may be direct interview or mailed

questionnaire to the sample- consumers DF = (ID+ ID+…….ID)NCn

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3.End-use method

Ist stage :- Identify and list all possible users of the product in question.

IInd stage :-fixing suitable technical ‘norms’ of consumption of the product under study.

IIIrd stage :- Application of the norms. Final stage :- Aggregate the product- wise or use-

wise content of the item for which the demand is to be forecast.

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Opinion poll methods

1. Expert opinion method2. Delphi method3. Surveys of Managerial plans4. Market studies and experiments

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1.Expert opinion method

In this, sales representative of firms assess the demand for the targeted product in the areas, regions or cities that they represent.

The estimates of demand thus obtained form different regions are added up to get the overall probable demand for a product.

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2.Delphi method

Under this method, the experts are provided information on estimates of forecasts of other experts along with the underlying assumptions.

The experts may revise their own estimate in the light of forecast made by other experts.

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Statistical methods

Trend projection methods Barometric methods Econometric method.

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