Mba 2 Sem Demand For Casting

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Demand Forecasting

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Mba 2 Sem Demand For Casting

  1. 1. DEMAND FORCASTING
  2. 2. DEMAND FORCASTING <ul><li>Demand forecasting is predicting the future demand for firm’s product. </li></ul><ul><li>Demand forecasting helps in following areas:- </li></ul><ul><li>Planning and scheduling production. </li></ul><ul><li>Acquiring inputs. </li></ul><ul><li>Making provision for finances. </li></ul><ul><li>Formulating pricing strategy. </li></ul><ul><li>Planning advertisement. </li></ul>
  3. 3. Steps in demand forecasting <ul><li>Specifying the objective. </li></ul><ul><li>Determining the time perspective. </li></ul><ul><li>Making choice of method for demand forecasting. </li></ul><ul><li>Collection of data and data adjustment. </li></ul><ul><li>Estimation and interpretation of results. </li></ul>
  4. 4. Techniques of demand forecasting . Survey Statistical Consumer Opinion poll <ul><li>1.Complete </li></ul><ul><li>Enumeration </li></ul><ul><li>Sample Survey </li></ul><ul><li>End use Method </li></ul><ul><li>Expert Opinion </li></ul><ul><li>Delphi Methods </li></ul><ul><li>Survey of </li></ul><ul><li>Managerial Plans </li></ul><ul><li>4. Market Experiment </li></ul>1 Trend Projection Method 2 Barometric Method. 3 Econometric Method.
  5. 5. Techniques of demand forecasting. <ul><li>Consumer survey method- Direct interviews- </li></ul><ul><li>1. Consumer Survey Method – Direct Interviews </li></ul><ul><li>a.Complete enumeration </li></ul><ul><li>b.Sample survey </li></ul><ul><li>c.End-use method </li></ul>
  6. 6. 1.Complete enumeration :- <ul><li>In this, almost all the potential users of the product are contacted and are </li></ul><ul><li>asked about their future plan of </li></ul><ul><li>purchasing the product in question </li></ul><ul><li>2. The quantity indicated by the consumers are added together to obtain the probable demand for the product. </li></ul><ul><li>DF= ID 1 +ID 2 +……..+ID n </li></ul>
  7. 7. 2.Sample survey <ul><li>Under this , only a sample of potential consumers or users is selected for interview. </li></ul><ul><li>Consumers to be surveyed are selected from the relevant market through a sampling method. </li></ul><ul><li>Method of survey may be direct interview or mailed questionnaire to the sample- consumers </li></ul><ul><li>DF = (ID+ ID+…….ID) N C n </li></ul>
  8. 8. 3.End-use method <ul><ul><li>Ist stage :- Identify and list all possible users of the product in question. </li></ul></ul><ul><ul><li>IInd stage :-fixing suitable technical ‘norms’ of consumption of the product under study. </li></ul></ul><ul><ul><li>IIIrd stage :- Application of the norms. </li></ul></ul><ul><ul><li>Final stage :- Aggregate the product- wise or use-wise content of the item for which the demand is to be forecast. </li></ul></ul>
  9. 9. Opinion poll methods <ul><li>Expert opinion method </li></ul><ul><li>Delphi method </li></ul><ul><li>Surveys of Managerial plans </li></ul><ul><li>Market studies and experiments </li></ul>
  10. 10. 1.Expert opinion method <ul><li>In this, sales representative of firms assess the demand for the targeted product in the areas, regions or cities that they represent. </li></ul><ul><li>The estimates of demand thus obtained form different regions are added up to get the overall probable demand for a product. </li></ul>
  11. 11. 2.Delphi method <ul><li>Under this method, the experts are provided information on estimates of forecasts of other experts along with the underlying assumptions. </li></ul><ul><li>The experts may revise their own estimate in the light of forecast made by other experts. </li></ul>
  12. 12. Surveys of Managerial plans <ul><li>Such Surveys is that plans generally from the basis for future actions. </li></ul><ul><li>for Ex. Capital Expenditure budgets from large corporations are usually planned well in Advance. </li></ul>
  13. 13. Market studies and experiments <ul><li>Under this method firms first select some areas of the representative markets having similar features. </li></ul><ul><li>Then they carry out market experiments by changing prices, expenditure and other controllable variables in demand function. </li></ul>
  14. 14. Statistical methods <ul><li>Trend projection methods </li></ul><ul><li>Barometric methods </li></ul><ul><li>Econometric method. </li></ul>
  15. 15. Trend projection methods <ul><li>This methods is concerned with the study of movement of variables through time. </li></ul><ul><li>This requires long and reliable time series data. </li></ul><ul><li>This is based on an assumption that past trends will be continued to play their part in same manner in future </li></ul>
  16. 16. Barometric methods <ul><li>This construct an index of relevant economic indicators and to forecast future trends on the basis of movements in the index of economic indicators. </li></ul><ul><li>Indicators are :- </li></ul><ul><li>Leading indicators. </li></ul><ul><li>Coincidental indicators. </li></ul><ul><li>Lagging indicators </li></ul>
  17. 17. Contd… <ul><li>Graphical Method </li></ul><ul><li>Fitting Trend Equation or least squares Method </li></ul><ul><li>Box Jenkins Method </li></ul>
  18. 18. . <ul><li>Leading indicators :- it moves up & down ahead of some other series. </li></ul><ul><li>E.g.., (i) index of net business investment, (ii) change in the value of inventories: (iii) index of prices of the materials . </li></ul><ul><li>Coincidental indicators :- </li></ul><ul><li>it moves up and down simultaneously with the level of general economic activities. e.g., (i) no.s of employees in non agriculture sector : (ii) rate of unemployment ;(iii) gross national products at constant prices. </li></ul>
  19. 19. <ul><li>Lagging indicators :- </li></ul><ul><li>it consist of those indicators that follows a change after some time-lag. </li></ul><ul><li>e.g., labour cost per unit of manufactured output, </li></ul><ul><li>Lending rates for short term loans </li></ul>
  20. 20. Econometric method. <ul><li>This method combines statistical tools with economic theories to estimate economic variables and to forecast the intended economic variables. </li></ul><ul><li>Methods:- </li></ul><ul><li>Regression method </li></ul><ul><li>Simultaneous equation method </li></ul>
  21. 21. Thanks

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