Demand forecasting

1. Presented by : Aditya kashyap
M.S.Ramaiah

2.  Predicting or estimating the future demand
for a product
 Undertaken for the purpose of planning and
decision making

3.  Business Decision Making
 Forward Planning and Scheduling
 Acquiring Inputs
 Making provision for finance
 Formulating pricing strategy
 Planning advertisement

4.  Purposes of forecasting
 Length of forecasts
 levels:
◦ Macro-level
◦ Industry level
◦ Firm level
 general or specific (product- wise)?
 New or well established products.

5.  Type of product
◦ Producer goods
◦ Consumer goods
◦ Consumer durables (for other industries )
◦ Services

6.  Short Term (0 to 3 months): for inventory
management and scheduling.
 Medium Term (3 months to 2 years): for
production planning, purchasing, and
distribution.
 Long Term (2 years and more): for capacity
planning, facility location, and strategic
planning.

7.  Specifying the Objective
 Determining the time Perspective
 Determining the type of good
 Selecting a proper method of forecasting
 Collection of data
 Interpretation of results

8.  Clarity
 Mention assumptions, methodology and
sources.
 Avoid using vague generalities.
 Give the possible margin of error.
 Make use of charts and graphs for easy
comprehension.

9.  Simplicity and ease of comprehension.
 Accuracy
◦ degree of deviations between forecasts and actuals
◦ the extent of success in forecasting directional
changes.
 Economy (cost)
 Maintenance of timeliness.

10. Methods of
Demand
Forecasting
Survey Statistical
Methods Methods

11.  Consumer Survey Methods
◦ Complete Enumeration Method
◦ Sample Survey Method
◦ End Use Method
 Opinion Methods
◦ Experts Opinion Method
◦ Test Marketing Method
◦ Delphi Method

12.  Trend Analysis
 Time Series
 Regression

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