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Demand Estimation and Demand Forecasting

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Demand Estimation and Demand Forecasting

  1. 2. Group A Muhammed Faris Hamdan Jasim Mansoor SAFI Institute of Advanced Study Paper Presentation B.Com first semester
  2. 3. Agenda
  3. 4. Demand estimation
  4. 5. Demand estimation <ul><ul><li>Uncertainty in business activity. </li></ul></ul><ul><ul><li>Risk involved in the business activity. </li></ul></ul><ul><ul><li>Success depends upon estimation and forecasting </li></ul></ul>
  5. 6. Demand estimation <ul><ul><li>To understand the functional relationship between demands and its various determinants. </li></ul></ul><ul><ul><li>The estimation of quantitative nature of demand and the its determinants. </li></ul></ul><ul><ul><li>Demand function –> Q = f( Px, Y, Pr, Ad,etc) </li></ul></ul>
  6. 7. Demand estimation <ul><ul><li>Q = α 1 - α 2 Px + α 3 Y+ u </li></ul></ul><ul><ul><li>1.Identification of variable: Depended and independent variables </li></ul></ul><ul><ul><li>2. Development of model : Mathematical equation </li></ul></ul><ul><ul><li>3. Collection of data: Primary and Secondary sources of data </li></ul></ul><ul><ul><li>4. Estimation of parameter of the model </li></ul></ul><ul><ul><li>5. Development of estimates based on the model </li></ul></ul>
  7. 8. Demand estimation
  8. 9. Demand estimation <ul><ul><li>The model can not be exact </li></ul></ul><ul><ul><li>Quantitative and qualitative nature of consumer behaviour </li></ul></ul><ul><ul><li>Indifferent consumer behavior </li></ul></ul>
  9. 10. Demand forecasting
  10. 11. Demand forecasting <ul><ul><li>Estimating the anticipated future value of demand on the bases of past data. </li></ul></ul><ul><ul><li>Long-run forecasting cover 5,10 or 20 years and short-run cover 3 months or 6 months. </li></ul></ul><ul><ul><li>What will be sale of gold in the next three year…. </li></ul></ul>
  11. 12. Demand forecasting <ul><ul><li>To prepare suitable sales and production policy </li></ul></ul><ul><ul><li>To ensure the purchase of raw material and minimize the cost </li></ul></ul><ul><ul><li>Setting sale target and utilization of maximum recourses </li></ul></ul><ul><ul><li>To determine appropriate Advt. policy and promotion program. </li></ul></ul><ul><ul><li>Appropriate production scheduling to avoid the over production </li></ul></ul><ul><ul><li>It help to determined suitable price policy </li></ul></ul><ul><ul><li>To determined financial requirement </li></ul></ul>
  12. 13. Demand forecasting
  13. 14. Demand forecasting
  14. 15. Demand estimation <ul><ul><li>If the forecaster is inefficient or inexperienced, the result may be worng </li></ul></ul><ul><ul><li>Demand depends to large no. of independent variables </li></ul></ul><ul><ul><li>Demand depends upon psychology of consumer </li></ul></ul><ul><ul><li>It is only a estimation, a certain amount of error is always there </li></ul></ul>
  15. 18. Our special Thanks <ul><li>Mr. SABU K.T. </li></ul><ul><li>Dept. of Economics </li></ul>

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