Demand forecasting is used to predict future demand for a firm's products so they can plan production accordingly. It allows for better planning and resource allocation. There are characteristics of good forecasting methods like time horizon, data patterns, cost, and accuracy. Demand forecasting can be short-run to set sales policies and scheduling, or long-run for capital planning. Forecasting also differs based on the period, level, if for a new or established product, and type of product. The steps involve identifying the object, determining product nature, analyzing demand determinants, choosing a method, and testing accuracy. Common methods include survey, statistical, and reasoned opinion approaches.

1. DEMAND FORECASTING TO ASSESS THE PROBABLE DEMAND OF A FIRM’S PRODUCT. PLAN IT’S FUTURE PRODUCTION ACCORDINGLY. BETTER PLANNING & ALLOCATION OF RESOURCES. FORECASTING PREDICTION ESTIMATION DEMAND FORECASTING PREDICTS ABOUT FUTURE TRENDS OF A SALES OF A PRODUCT WHEREAS DEMAND ESTIMATION TRIES TO FIND OUT EXPECTED PRESENT SALES LEVEL GIVEN THE PRESENT STATE OF DEMAND DETERMINANTS.

2. CHARACTERISTIC OF GOOD FORECASTING METHODS: TIME HORIZON LEVEL OF DETAIL STABILITY PATTERENS OF DATA TYPE OF MODEL COST ACCURACY EASE OF APPLICATION

3. DEMAND FORECASTING : SHORT RUN FORECASTING HELPS IN ; PREPARING SUITABLE SALES POLICY & PROPER SCHEDULING OF OUTPUT. AVOIDING OVER-STOCKING OR COSTLY DELAYS IN MEETING THE ORDERS. ARRIVING AT SUITABLE PRICE FOR THE PRODUCT. DECIDING ABOUT NECESSARY MODIFICATIONS IN ADVERTISING & SALES TECHNIQUES. LONG RUN FORECASTING HELPS IN ; PROPER CAPITAL PLANNING. SAVING THE WESTAGE IN MATERIAL, MACHINE TIME, & CAPASITY.

4. SCOPE OF FORECASTING * PERIOD OF FORECASTING : – SHORT TERM, MEDIUM TERM, LONG TERM * LEVEL OF FORECASTING : – MACRO-ECNOMIC FORECASTING. – INDUSTRY DD FORECASTING. – FIRM DD FORECASTING. – PRODUCT-LINE FORECASTING.

5. * FORECASTING FOR A NEW PRODUCT OR AN ESTABLISHED PRODUCT * TYPE OF PRODUCT FOR WHICH FORECAST IS REQUIRED - – CONSUMER DURABLE. – CONSUMER NON-DURABLE. – CAPITAL GOODS.

6. STEPS IN DEMAND FORECASTING * IDENTIFICATION OF OBJECT : THE APPROACH TO FORECASTING WOULD DIFFER FROM OBEJCT TO OBJECT. OBJECTS ARE ; ESTIMATION OF QUANTITY & COMPOSITION OF DEMAND. ESTIMATION OF THE PRICE AT WHICH PRODUCT IS TO OFFER FOR SALE. SALES PLANNING. INVENTORY CONTROL.

7. * DETERMINATION OF NATURE OF GOODS UNDER CONSIDERATIONS : CAPITAL GOODS. CONSUMER DURABLES. CONSUMER NON-DURABLES. * DETERMINANTS OF DEMAND * ANALYSIS OF FACTORS * CHOICE OF METHOD * TESTING ACCURACY

8. FORECASTING METHODS SURVEY METHODS STATISTICAL METHODS CONSUMER COLLECTIVE REASONED MARKET SURVEY OPINION OPINION EXPERIMENTS TIME SERIES ANALYSIS REGRESSIONANALYSIS GRAPHICAL SEMI AVERAGE MOVING AVERAGE LEAST SQUARES METHOD METHOD METHOD METHOD