Meaning of demand forecasting , determinants and categorization of forecasting, choosing the technique of forecasting,objectives and methods of forecasting,tools used for forecasting and limitations to forecasting are discussed.
A presentation on demand forecasting ,explaining its meaning ,levels of demand forecasting , Techniques ,Factors , Benefits , and a small case study on Cadbury India ltd on Demand Forecasting
A Study on Customer Satisfaction towards Online Shopping in Filpkart in Coimb...ijtsrd
Flipkart are one of the leading online shopping websites in India. In this paper an attempt has been made to find customers satisfaction towards and flipkart. A sample of 50respondent's were conveniently selected from Coimbatore District. The findings were analyzed using simple percentage analysis, ranking test. Findings reveal that female customers whose annual income is high are highly satisfied towards and flipkart. The research also concludes that even though is giving branded and quality product but customer are very much attracted towards the best services of flipkart. R. Maheswari | N. Sandhiya "A Study on Customer Satisfaction towards Online Shopping in Filpkart in Coimbatorecity" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29267.pdf Paper URL: https://www.ijtsrd.com/management/consumer-behaviour/29267/a-study-on-customer-satisfaction-towards-online-shopping-in-filpkart-in-coimbatorecity/r-maheswari
Meaning of demand forecasting , determinants and categorization of forecasting, choosing the technique of forecasting,objectives and methods of forecasting,tools used for forecasting and limitations to forecasting are discussed.
A presentation on demand forecasting ,explaining its meaning ,levels of demand forecasting , Techniques ,Factors , Benefits , and a small case study on Cadbury India ltd on Demand Forecasting
A Study on Customer Satisfaction towards Online Shopping in Filpkart in Coimb...ijtsrd
Flipkart are one of the leading online shopping websites in India. In this paper an attempt has been made to find customers satisfaction towards and flipkart. A sample of 50respondent's were conveniently selected from Coimbatore District. The findings were analyzed using simple percentage analysis, ranking test. Findings reveal that female customers whose annual income is high are highly satisfied towards and flipkart. The research also concludes that even though is giving branded and quality product but customer are very much attracted towards the best services of flipkart. R. Maheswari | N. Sandhiya "A Study on Customer Satisfaction towards Online Shopping in Filpkart in Coimbatorecity" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29267.pdf Paper URL: https://www.ijtsrd.com/management/consumer-behaviour/29267/a-study-on-customer-satisfaction-towards-online-shopping-in-filpkart-in-coimbatorecity/r-maheswari
Project On Online grocery_MBA Marketingsagar reddy
1) To study the perception of grocery retailers towards click and brick model in Bangalore.
2) To understand the impact of brick and click model on customer retention.
3) To understand the customer willingness to purchase grocery online from local
retailers.
Project report on consumer behavior towards digital marketingArhaam Ansari
A study of consumer behavior towards Digital Marketing. It means what is the factors which influence the consumer behavior in making purchasing decisions and also increase repeat purchasing.
A Study on the Consumer Perception about the Fast Foods in Southern Delhi RegionSuryadipta Dutta
Objectives of the study:
To identify the factors affecting the choice of (Indian youth) consumers for fast food.
To examine the consumption pattern towards fast foods particularly with respect to the frequency of visits and choice of fast foods.
To check the awareness of health hazards of fast food and its association with overweight.
This is a presentation covering the concepts of demand forecasting. it includes the meaning of demand forecasting, purpose, scope and factors affecting demand forecasting. It also covers the methods of forecasting for both new and existing products.
Demand Forecasting is the process in which historical sales data is used to develop an estimate of an expected forecast of customer demand. To businesses, Demand Forecasting provides an estimate of the amount of goods and services that its customers will purchase in the foreseeable future.
There are many types for forecast the future demand of the company. Delphi Method, Opinion Poll method, survey method etc...
Project On Online grocery_MBA Marketingsagar reddy
1) To study the perception of grocery retailers towards click and brick model in Bangalore.
2) To understand the impact of brick and click model on customer retention.
3) To understand the customer willingness to purchase grocery online from local
retailers.
Project report on consumer behavior towards digital marketingArhaam Ansari
A study of consumer behavior towards Digital Marketing. It means what is the factors which influence the consumer behavior in making purchasing decisions and also increase repeat purchasing.
A Study on the Consumer Perception about the Fast Foods in Southern Delhi RegionSuryadipta Dutta
Objectives of the study:
To identify the factors affecting the choice of (Indian youth) consumers for fast food.
To examine the consumption pattern towards fast foods particularly with respect to the frequency of visits and choice of fast foods.
To check the awareness of health hazards of fast food and its association with overweight.
This is a presentation covering the concepts of demand forecasting. it includes the meaning of demand forecasting, purpose, scope and factors affecting demand forecasting. It also covers the methods of forecasting for both new and existing products.
Demand Forecasting is the process in which historical sales data is used to develop an estimate of an expected forecast of customer demand. To businesses, Demand Forecasting provides an estimate of the amount of goods and services that its customers will purchase in the foreseeable future.
There are many types for forecast the future demand of the company. Delphi Method, Opinion Poll method, survey method etc...
In this presentation you will learn about demand of a product in the market and demand forecasting, means how demand of a particular product is determined in the market
Principles of Marketing. It tackles market research, its importance and purpose. And also the process or steps in conducting marketing research. The kinds of data sampling and size etc.
Letter of Credit | Documentary Collection | DA and DP process | Trade FinanceSachin Paurush
Various topics of Trade finance:
1. Letter of Credit: parties involved and process
2. Documentary Collection
3. DA and DP process
4.Trade Finance avenues
Demand forecasting, a crucial concept of Managerial Economics.
How demand is forecasted for various time horizons and various firms.
How is done for existing as well as new companies.
Introduction of economics | Managerial Economics | Natures and ScopeSachin Paurush
Introduction of economics | Managerial Economics | Natures and Scope
The crucial concepts of Managerial Economics.
Where all economics is applied and how it is going to affect one's life!!!
Trends in international trade WTO report 2017-18 | International Trade | Ba...Sachin Paurush
Report on international trade in the world and their impact on the economy. This report has been published by World Trade Organisation (WTO) for 2017 - 2018 period.
An introductory document for economic systems viz. Socialism, Capitalism and mixed Economy.
It also talks about various schools of the same economic systems.
Ethnocentric, polycentric, regiocentric, geocentric model (EPRG) or EPG ModelSachin Paurush
EPRG model, sometimes called also EPG model, is used in the international marketing. It was introduced by Perlmutter (1969). The strategy of the organization is characterized by three factors: ethnocentrism, polycentrism and geocentrism.
- Prof. (Dr.) Sachin Paurush
Demand forecasting is predicting future demand for the product. In other words, it refers to the prediction of a future demand for a product or a service on the basis of the past events and prevailing trends in the present.
Process of Forecasting, Techniques of forecasting,
- Prof. (Dr.) Sachin Paurush
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
Seminar: Gender Board Diversity through Ownership Networks
Demand forecasting | Prof. Sachin Paurush
1. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
Demand forecasting is the art and science the process of predicting the future demand for the
firm’s product to drive holistic execution of such demand by corporate supply chain and business
management. In other words, demand forecasting is comprised of a series of steps that involves the
anticipation of demand for a product in future under both controllable and non-controllable
factors.
Demand forecasting may be used in production planning, inventory management, and at times in
assessing future capacity requirements, or in making decisions on whether to enter a new market.
Predicting the future demand for a product helps the organization in making decisions in one of
the following areas:
Planning and scheduling the production and acquiring the inputs accordingly.
Making the provisions for finances.
Formulating a pricing strategy.
Planning advertisement and implementing it.
Steps in Demand Forecasting:
Specifying the Objective
Determining the Time Perspective
Choice of method for Demand Forecasting
Collection of Data and Data Adjustment
Estimation and Interpretation of Results
2. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
Techniques of Demand Forecasting
1. Survey Methods: Under the survey method, the consumers are contacted directly and are
asked about their intentions for a product and their future purchase plans. This method is
often used when the forecasting of a demand is to be done for a short period of time. The
survey method includes:
1.1. Consumer Survey Method
Consumer Survey Method is one of the techniques of demand forecasting that involves direct
interview of the potential consumers.
Consumer Survey Method includes the further three methods that can be used to interview
the consumer:
1.1.1. Complete Enumeration Method:
Under this method, a forecaster contacts almost all the potential users of the product and asks
them about their future purchase plan. The probable demand for a product can be obtained by
adding all the quantities indicated by the consumers. Such as the majority of children in city report
the quantity of chocolate (Q) they are willing to purchase, then total probable demand (Dp) for
chocolate can be determined as:
3. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
Dp = Q1+Q2+Q3+Q4+……+Qn
Where, Q1, Q2, Q3 denote the demand indicated by children 1, 2,3 and so on.
One of the major limitations of this method is that it can only be applied where the consumers are
concentrated in a certain region or locality. And if the population is widely dispersed, then it can
turn out to be very costly. Besides this, the other limitation is that the consumers might not know
their actual demand in future. Due to this, they may give a hypothetical answer that may be
biased according to their own expectations regarding the market conditions.
1.1.2. Sample Survey:
The sample survey method is often used when the target population under study is large. Only the
sample of potential consumers is selected for the interview. A sample of consumers is selected
through a sampling method. Here, the method of survey may be a direct interview or mailed
questionnaires to the selected sample-consumers. The probable demand, indicating the response
of the consumers can be estimated by using the following formula:
Where Dp = probable demand forecast; H = Census number of households from the relevant
market; Hs = number of households surveyed or sample households; HR = Number of households
reporting demand for a product; AD = Average Expected consumption by the reporting
households (total quantity consumed by the reporting households/ Number of households.
This method is simple, less costly and even less time-consuming as compared to the comprehensive
survey methods. The sample Survey method is often used to estimate a short-run demand of
business firms, households, government agencies who plan their future purchases. However, the
major limitation of this method is that a forecaster cannot attribute more reliability to the forecast
than warranted.
End-use Method: The end-use method is mainly used to forecast the demand for inputs. This
method of demand forecasting has a considerable theoretical and practical value. Under this
method, a forecaster builds the schedule of probable aggregate future demand for inputs by
consuming industries and several other sectors. In this method, during the estimation of a demand
the changes in technological, structural and other factors that influence the demand is taken into
the consideration.
The end-use method helps in determining the future demand for an industrial product in details
by type and size. Also, with the help of end-use method, a forecaster can pinpoint or trace at any
time in the future as to where, why and how the actual consumption has been deviated from the
estimated demand.
Thus, these are some of the most commonly used consumer survey methods, wherein the
customers are directly asked about their intentions about the product and their future purchase
plans.
4. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
1.1.3. Opinion Poll Methods
The Opinion Poll Methods are used to collect
opinions of those who possess the knowledge
about the market, such as sales
representatives, professional marketing
experts, sales executives and marketing
consultants.
The Opinion poll methods include the
following survey methods:
1.1.3.1. Expert-Opinion Method:
Companies with an adequate network of sales representatives can capitalize on them in assessing
the demand for a target product in a particular region or locality that they represent. Since sales
representatives are in direct touch with the customer, are supposed to know the future purchase
plans of their customers, their preference for the product, their reaction to the introduction of a
new product, their reactions to the market changes and the demand for rival products.
Thus, sales representatives are likely to provide an approximate, if not accurate, estimation of
demand for a target product in their respective regions or areas. In the case of firms, which lack in
sales representatives can collect information regarding the demand for a product through
professional market experts or consultants, who can predict the future demand on the basis of
their expertise and experience.
Although the expert opinion method is too simple and inexpensive, it suffers from serious
limitations. First, The extent to which the estimates provided by the sales representatives or
professionals are reliable depends on their skill and expertise to analyze the market and their
experience. Secondly, There are chances of over or under-estimation of demand due to the
subjective judgment of the assessor. Thirdly, the evaluation of market demand is often based on
inadequate information available to the sales representatives since they have a narrow view of
the market.
1.1.3.2. Delphi Method:
The Delphi method is the extension of the expert opinion method wherein the divergent expert
opinions are consolidated to estimate a future demand. The process of the Delphi technique is very
simple. Under this method, the experts are provided with the information related to estimates of
forecasts of other experts along with the underlying assumptions. The experts can revise their
estimates in the light of demand forecasts made by the other group of experts. The consensus of
experts regarding the forecast results in a final forecast.
1.1.3.3. Market Studies and Experiments:
Another alternative method to collect information regarding the current as well as future demand
for a product is to conduct market studies and experiments on the consumer behavior under
actual, but controlled market conditions. This method is commonly known as Market Experiment
Method.
Under this method, a firm select some areas of representative markets, such as three or four cities
having the similar characteristics in terms of the population income levels, social and cultural
5. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
background, choices and preferences of consumers and occupational distribution. Then the market
experiments are carried out by changing the prices, advertisement expenditure and all other
controllable factors under demand function, other things remaining the same. Once these changes
are introduced in the market, the consequent changes in the demand for a product are recorded.
On the basis of these recorded estimates, the elasticity coefficients are calculated. These computed
coefficients along with the demand function variables are used to assess the future demand for a
product.
The alternative method to market experiments is the Consumer Clinics or Controlled Laboratory
Method wherein the consumers are given some money to make purchases in stipulated store
goods with different prices, packages, displays, etc. This experiment displays the responsiveness
towards the changes made in the prices, packaging and a display of the product. One of the
major limitations of market experiment method is that it is too expensive and cannot be afforded
by small firms. Also, this method is based on short-term controlled conditions which might not exist
in the uncontrolled market. Therefore, the results may not be applicable in the long term
uncontrolled conditions.
Thus, these are some of the opinion poll methods that are used to gather expert opinions of those
who are closely related to the market with an aim to estimate a future demand for the product.
2. Statistical Methods: The statistical methods are often used when the forecasting of demand is
to be done for a longer period. The statistical methods utilize the time-series (historical) and
cross-sectional data to estimate the long-term demand for a product. The statistical methods
are used more often and are considered superior than the other techniques of demand
forecasting due to the following reasons:
There is a minimum element of subjectivity in the statistical methods.
The estimation method is scientific and depends on the relationship between the dependent
and independent variables.
The estimates are more reliable
Also, the cost involved in the estimation of demand is the minimum.
The statistical methods include:
2.1. Trend Projection Methods
The Trend Projection Method is the most
classical method of business forecasting,
which is concerned with the movement of
variables through time. This method
requires a long time-series data.
The trend projection method is based on
the assumption that the factors liable for
the past trends in the variables to be
projected shall continue to play their role
in the future in the same manner and to
the same extent as they did in the past while determining the variable’s magnitude and direction.
In predicting demand for a product, the trend projection method is applied to the long time-series
data. A long-standing firm can obtain such data from its departments (such as sales) and the
6. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
books of accounts. While the new firms can obtain data from the old firms operating in the same
industry. The trend projection method includes three techniques based on the time-series data.
These are:
2.1.1. Graphical Method:
It is the most simple statistical method in which the annual sales data are plotted on a graph, and
a line is drawn through these plotted points. A free hand line is drawn in such a way that the
distance between points and the line is the minimum. Under this method, it is assumed that future
sales will assume the same trend as followed by the past sales records. Although the graphical
method is simple and inexpensive, it is not considered to be reliable. This is because the extension of
the trend line may involve subjectivity and personal bias of the researcher.
2.1.2. Fitting Trend Equation or Least Square Method:
The least square method is a formal technique in which the trend-line is fitted in the time-series
using the statistical data to determine the trend of demand. The form of trend equation that can
be fitted to the time-series data can be determined either by plotting the sales data or trying
different forms of the equation that best fits the data. Once the data is plotted, it shows several
trends. The most common types of trend equations are:
Linear Trend: when the time-series data reveals a rising or a linear trend in sales, the following
straight line equation is fitted:
S = a + bT
Where S = annual sales; T = time (years); a and b are constants.
Exponential Trend: The exponential trend is used when the data reveal that the total sales have
increased over the past years either at an increasing rate or at a constant rate per unit time.
2.1.3. Box-Jenkins Method:
Box-Jenkins method is yet another forecasting method used for short-term predictions and
projections. This method is often used with stationary time-series sales data. A stationary time-
series data is the one which does not reveal a long term trend. In other words, Box-Jenkins method
is used when the time-series data reveal monthly or seasonal variations that reappear with some
degree of regularity.
Thus, these are the commonly used trend-projection methods that tell about the trend of demand
for a product and are based on a long and reliable time-series data.
2.2. Barometric Methods
The Barometric Method of Forecasting was developed to forecast the trend in the overall
economic activities. This method can nevertheless be used in forecasting the demand prospects, not
necessarily the actual quantity expected to be demanded.
Often, the barometric method of forecasting is used by the meteorologists in weather forecasting.
The weather conditions are forecasted on the basis of the movement of mercury in a barometer.
Based on this logic, economists use economic indicators as a barometer to forecast the overall
trend in the business activities.
7. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
The Barometric Method of forecasting was first developed in 1920’s, but, however, was abandoned
due to its failure to predict the Great Depression in 1930’s. The Barometric technique was,
however, revived, reformed and developed further by the National Bureau of Economic Research
(NBER), USA in the late 1930’s.
The barometric method is based on the approach of developing an index of relevant economic
indicators and forecasting the future trends by analyzing the movements in these indicators. A
time-series of several indicators is developed to study the future trend. These can be classified as:
1. Leading Series: The leading series is comprised of indicators which move up or down ahead
of some other series The most common examples of leading indicators are- net business
investment index, a new order for durable goods, change in the value of inventories,
corporate profits after tax, etc.
2. Coincidental Series: The coincidental series include indicators which move up and down
simultaneously with the general level of economic activities. The examples of coincidental
series – the rate of unemployment, the number of employees in the non-agricultural sector,
sales recorded by manufacturing, retail, and trading sectors, gross national product at
constant prices.
3. Lagging Series: A series consisting of those indicators, which after some time-lag follows the
change. Some of the lagging series are- outstanding loan, labor cost per unit production,
lending rate for short-term loans, etc.
The following are the criteria on which the indicators are chosen:
The economic significance of the indicator; such as greater the significance the greater is the
score of the indicator.
Time Series- statistical adequacy; a higher score is given to the indicator provided with
adequate statistics.
Conformity with the movement in overall economic activities.
Immediate availability of the time series.
The consistency of the series to the turning points in overall economic activities.
Smoothness of the series.
The problem of indicator selection may arise if some indicators appear in more than one class of
the indicators.
The only advantage of the barometric method of forecasting is that is helps to overcome the
problem of finding the value of an independent variable under regression analysis. The major
limitations of this method are; First, Often the leading indicator of the variable to be forecasted is
difficult to find out or is not easily available. Secondly, the barometric technique can be used only
for a short-term forecasting.
2.3. Econometric Methods
The Econometric Methods make use of statistical tools and economic theories in combination to
estimate the economic variables and to forecast the intended variables.
The econometric model can either be a single-equation regression model or may consist a system
of simultaneous equations. In most commodities, the single-equation regression model serves the
purpose.
But, however, in the case where the explanatory economic variables are so interdependent or
interrelated to each other that unless one is defined the other variable cannot be determined, a
8. Managerial Economics Demand Forecasting Prof. (Dr.) Sachin Paurush
Prof. (Dr) Sachin Kumar Paurush
single-equation regression model does not serve the purpose. And, therefore in such situation, the
system of simultaneous equations is used to forecast the variable.
The econometric methods are comprised of two basic methods, these are:
Regression Method: The regression analysis is the most common method used to forecast the
demand for a product. This method combines the economic theory with statistical tools of
estimation. The economic theory is applied to specify the demand determinants and the nature of
the relationship between product’s demand and its determinants. Thus, through an economic
theory, a general form of a demand function is determined. While the statistical techniques are
applied to estimate the values of parameters in the projected equation.
Under the regression method, the first and the foremost thing is to determine the demand
function. While specifying the demand functions for several commodities, one may come across
many commodities whose demand depends by or large, on a single independent variable. For
example, suppose in a city, the demand for items like tea and coffee is found to depend largely on
the population of the city, then the demand functions of these items are said to be single-variable
demand functions.
On the other hand, if it is found out that the demand for commodities like sweets, ice-creams,
fruits, vegetables, etc., depends on a number of variables like commodity’s own price, the price of
substitute goods, household incomes, population, etc. Then such demand functions are called as
multi-variable demand functions.
Thus, for a single variable demand function, the simple regression equation is used while for
multiple variable functions, a multi-variable equation is used for estimating the demand for a
product.
Simultaneous Equations Model: Under simultaneous equation model, demand forecasting involves
the estimation of several simultaneous equations. These equations are often the behavioral
equations, market-clearing equations, and mathematical identities.
The regression technique is based on the assumption of one-way causation, which means
independent variables cause variations in the dependent variables, and not vice-versa. In simple
terms, the independent variable is in no way affected by the dependent variable. For example,
D = a – bP, which shows that price affects demand, but demand does not affect the price, which is
an unrealistic assumption.
On the contrary, the simultaneous equations model enables a forecaster to study the simultaneous
interaction between the dependent and independent variables. Thus, simultaneous equation
model is a systematic and complete approach to forecasting. This method employs several
mathematical and statistical tools of estimation.
The econometric methods are most widely used in forecasting the demand for a product, for a
group of products and the economy as a whole. The forecast made through these methods is more
reliable than the other forecasting methods.
These are the different kinds of methods available for demand forecasting. A forecaster must
select the method which best satisfies the purpose of demand forecasting.