MANAGERIAL ECONOMICSDemand Forecasting MethodsPresented by :BABASAB PATIL
Demand forecasting Non statistical Statistical methods methods Market Survey Time experiments Regression method series Complete Sample Trend survey survey projection Simulated marketing Opinion surveyGraphical Delphi survey Test marketing
INTRODUCTION In modern business, production is often made in anticipation of demand. Anticipation of demand implies demand forecasting. Forecasting means expectations about the future course of development.
Meaning of Demand Forecasting Demand forecasting means expectations about the future course of the market demand for the product.
SURVEY METHOD The survey is the most direct approach to demand forecasting in the short run. It may be a sample survey or a census inquiry. A census inquiry means the inquiry of the entire universe or population.
The three variants of the surveymethod The consumer survey method. The collective method. Delphi method.
The Consumer Survey A sample survey of the consumers may be undertaken questioning them about what they are planning or intending to buy. Drawbacks of the consumer Survey method This method is expensive. It is time consuming.
The Collective Opinion Under the collective opinion method the salesmen have to report to the head office their estimates of expectations of the sales in the territories. The opinion method is cheaper and easy to handle, it is time consuming also. Drawback High element of bias of the reporting agency.
Delphi method Olaf helmer originated the Delphi method in the late 1940s.Delphi method is used for conducting opinion poll or survey. Under this method, the group of experts are repeatedly questioned for their opinion or comments on some issues and their agreements and disagreements are clearly identified.
MARKET EXPERIMENTATION Market experiments may be conducted to make certain specific observations. The two types of market experimentation Experimentation in laboratory. Test marketing.
EXPERIMENTATION INLABORATORY It is also referred to as the consumer clinic method. In this method, a consumer clinic or small laboratory is formed by creating an artificial market situation.
TEST MARKETING In this method a market experiment is performed under actual market conditions. First a choice of the market for experiments is made and is segregated from the rest.
Statistical Methods Once market demand data are collected by the marker survey or form the sales records of the firm demand forecasting can be possible from such a information. The Statistical methods Time Series Data. Trend Projections. Regression Analysis.
TIME SERIES Time series data refers to data collected over a period of time recording historical changes in price, income and other relevant variables influencing demand for the commodity.
TREND PROJECTIONS A time series analysis of sales data over a period of time is considered to serve as a good guide for sales or demand forecasting. Trends refer to the long term persistent movements of data in one direction –upward or downward.