3. LEVELS IN WHICH DEMAND
FORECASTING CAN BE APPLIED:
MICRO LEVEL
INDUSTRY LEVEL
MACRO LEVEL
4. MICRO LEVEL
It is the demand forecasting by individual
business firm for estimating the demand
for its product.
INDUSTRY LEVEL
It is done at the industry as a whole by
respective trade associations for the use
of their member firms.
MACRO LEVEL
It is done at a wider level. It is the
aggregate demand for the industrial
output by the nation as a whole. It is
based on the national income or
aggregate expenditure of the country.
5. TYPES OF DEMAND FORECASTING
SHORT TERM DEMAND FORECASTING
It is done for a period usually not
exceeding one year may be over a
month or a half year. It is done after
taking into consideration the
changes that are taking place in the
immediate future.
6. PURPOSES OF SHORT TERM DEMAND
FORECASTING
To evolve a suitable production policy.
To reduce the cost of purchase.
To determine appropriate price policy.
To set sales target and establish control.
To forecast short term financial requirements.
7. LONG TERM DEMAND FORECASTING
Long term forecasting is essential to decide upon
the size of the business unit, its fund
requirements, manpower requirements etc. It also
seeks to find out the scope for future expansion of
the business.
8. PURPOSES OF LONG TERM DEMAND
FORECASTING
Planning of a new unit or expansion of the existing unit.
Planning of long term financial requirements of the
business.
Planning of manpower requirements.
9. STEPS IN DEMAND FORECASTING
DETERMINATION OF OBJECTIVE:
There must be a specific objective that must be stated clearly.
SUB-DIVIDING THE TASKS:
Total tasks be subdivided into small tasks on the basis of product,
sales territories or market.
IDENTIFYING DEMAND DETERMINANTS:
All the factors affecting demand must be identified.
SELECTION OF METHOD:
A suitable forecasting method can be selected after considering the
nature of the product, forecast objective etc
10. STUDY THE ACTIVITIES OF THE COMPETETORS:
All the activities of the competitors that are affecting the demand
of the product is to be considered.
EVALUATION OF SALES FORECAST:
Analyzing the past details of the product sales and forecasting the
future demand.
REPORTING:
Presenting the analyzed data in an understandable form to the
management.
