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.

1. ASIANEDUCATIONGROUP
DEMAND
FOREACASTING
What beginners need to know

2. Meaning...
PROCESS OF
PREDICTING A FUTURE
EVENT
Underlying basis for
Production
Inventory
Personnel
Facilities

3. Base Demand
Minimum level of quantity
demanded at all times
Seasonal Component
Amount fluctuations due to
season of the product
Trend Component
When trend arrives or departs
from the market
Cyclic Component
In accordance with business
cycles phases:
Boom / Recession /
Depression/ Growth
Promotional Component
Demand added to brand
promotion or endorsement
Irregular Component
Random discrete events
FORECAST COMPONENTS

4. ForecastingTimeHorizons
Medium - Range
Forecast
Long - Range
Forecast
Short - Range
Forecast
Usually upto 3 months
Tend to be more accurate
Purchasing, job scheduling,
workforce levels etc.
3 months to 3 years
Sales and production
planning, budgeting
3 + Years
Tend to be more volatile
New product planning,
facility location, R&D

5. QUANTITATIVE METHODS
Naive method
Moving Average Method
Weighted Moving Average Method
Extrapolation
Exponential Smoothening
QUALITATIVE ASSESSMENT
Delphi Technique
Jury of Executive opinion
Salesforce composite
Market Survey

6. QUALITATIVE
ASSESSMENT
Delphi Technique
Panel of experts, queried iteratively
Market Survey
Ask the customer
Jury of Executive opinion
pool opinions of high-level experts augmented by
statistical methods
Salesforce composite
Estimates from individual salespersons are reviewed
for reasonableness , then aggregated

7. NAIVE
METHOD
The last period's actual are used as
this period's forecast,
without adjusting them or attempting to
establish causal factors. It is used only for
comparison with the forecasts generated by the
better (sophisticated) techniques.

8. NAIVE
METHOD

9. MOVING
AVERAGE
METHOD

10. MOVING
AVERAGE
METHOD

11. Weighted
Moving
Average
Method
.5 / .3 / .2
Three years weights