DEMAND FORECASTING

Demand forecasting for a product is the technique of estimating its demand in the

immediate or distant future . Demand forecasting is important for Inventory , production , etc.

DEFINITION OF DEMAND FORECAST

• According to Douglas , “ Demand Forecasting will be taken to mean the process of finding the values for demand in future time periods.”

• Purpose of Demand forecasting:- • 1. short term:-• -a. production policy –b. Inventories –c. sales target. –d.

sales strategy. –e. financial requirements• 2. long term:- 5 to 10 years• -a. new project , expansion. -b. long term financial needs. –

c. arranging suitable manpower. –d. changing pattern of consumption

SCOPE OF DEMAND FORECASTING• 1. Period covered under forecasting• -a . Short term forecasting• -b. medium term• -c. long term• 2. level of forecasting• -a. macro economic level• -b. industry level• -c. firm level• -d. product line level• 3. Purpose of forecasting• 4. Nature of Product• 5. Miscellaneous factors

TECHNIQUES OF FORECASTING

• 1. Opinion poll method• -a. Consumer’s survey method• -b. sample survey• -c. end use survey• 2. Collective opinion method• 3. Experts opinion method • 4. Statistical methods• -a. Trend projection • 5. Regression method• 6. Simultaneous equation method