Mba 2 Sem Demand For Casting

Prepared by:- Miss Kiran Soni LePrepared by:- Miss Kiran Soni Lecturer of SIMcturer of SIM

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DEMAND FORCASTINGDEMAND FORCASTING

• Demand forecasting is predicting the future Demand forecasting is predicting the future demand for firm’s product.demand for firm’s product.

• Demand forecasting helps in following Demand forecasting helps in following areas:-areas:-

1.1. Planning and scheduling production.Planning and scheduling production.

2.2. Acquiring inputs.Acquiring inputs.

3.3. Making provision for finances.Making provision for finances.

4.4. Formulating pricing strategy.Formulating pricing strategy.

5.5. Planning advertisement.Planning advertisement.


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Steps in demand Steps in demand forecastingforecasting

• Specifying the objective.Specifying the objective.

• Determining the time perspective.Determining the time perspective.

• Making choice of method for demand Making choice of method for demand forecasting.forecasting.

• Collection of data and data Collection of data and data adjustment.adjustment.

• Estimation and interpretation of Estimation and interpretation of results.results.


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Techniques of demand Techniques of demand

forecastingforecasting.. Survey Statistical

Consumer Opinion poll

1.Complete Enumeration

• Sample Survey• End use Method

1. Expert Opinion2. Delphi Methods

3. Survey ofManagerial Plans

4. Market Experiment

1 Trend Projection

Method2 Barometric

Method.3 Econometric

Method.


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Techniques of demand Techniques of demand forecasting.forecasting.

• Consumer survey method- Consumer survey method- Direct interviews-Direct interviews-

1. Consumer Survey Method – 1. Consumer Survey Method – Direct InterviewsDirect Interviews

a.Complete enumerationa.Complete enumeration

b.Sample surveyb.Sample survey

c.End-use methodc.End-use method


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1.Complete enumeration1.Complete enumeration:-:-1.1. In this, almost all the potential users In this, almost all the potential users

of the product are contacted and areof the product are contacted and are asked about their future plan of asked about their future plan of purchasing the product in questionpurchasing the product in question

2. The quantity indicated by the 2. The quantity indicated by the consumers are added together to consumers are added together to obtain the probable demand for the obtain the probable demand for the product.product.

DF= IDDF= ID11+ID+ID22+……..+ID+……..+IDnn


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2.Sample survey2.Sample survey

• Under this , only a sample of Under this , only a sample of potential consumers or users is potential consumers or users is selected for interview.selected for interview.

• Consumers to be surveyed are Consumers to be surveyed are selected from the relevant market selected from the relevant market through a sampling method.through a sampling method.

• Method of survey may be direct Method of survey may be direct interview or mailed questionnaire interview or mailed questionnaire to the sample- consumersto the sample- consumers

DF = (ID+ ID+…….ID)DF = (ID+ ID+…….ID)NNCCnn


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3.End-use method3.End-use method

– Ist stageIst stage :- Identify and list all possible :- Identify and list all possible users of the product in question.users of the product in question.

– IInd stageIInd stage :-fixing suitable technical :-fixing suitable technical ‘norms’ of consumption of the product ‘norms’ of consumption of the product under study.under study.

– IIIrd stageIIIrd stage :- Application of the norms. :- Application of the norms.– Final stageFinal stage :- Aggregate the product- :- Aggregate the product-

wise or use-wise content of the item for wise or use-wise content of the item for which the demand is to be forecast.which the demand is to be forecast.


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Opinion poll methodsOpinion poll methods

1.1. Expert opinion methodExpert opinion method

2.2. Delphi methodDelphi method

3.3. Surveys of Managerial plansSurveys of Managerial plans

4.4. Market studies and experimentsMarket studies and experiments


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1.Expert opinion method1.Expert opinion method

• In this, sales representative of firms In this, sales representative of firms assess the demand for the targeted assess the demand for the targeted product in the areas, regions or cities product in the areas, regions or cities that they represent.that they represent.

• The estimates of demand thus The estimates of demand thus obtained form different regions are obtained form different regions are added up to get the overall probable added up to get the overall probable demand for a product.demand for a product.


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2.Delphi method2.Delphi method

• Under this method, the experts are Under this method, the experts are provided information on estimates of provided information on estimates of forecasts of other experts along with forecasts of other experts along with the underlying assumptions. the underlying assumptions.

• The experts may revise their own The experts may revise their own estimate in the light of forecast estimate in the light of forecast made by other experts.made by other experts.


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Surveys of Managerial plansSurveys of Managerial plans

• Such Surveys is that plans generally Such Surveys is that plans generally from the basis for future actions.from the basis for future actions.

for Ex. Capital Expenditure budgets for Ex. Capital Expenditure budgets from large corporations are usually from large corporations are usually planned well in Advance.planned well in Advance.


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Market studies and Market studies and experimentsexperiments

• Under this method firms first select Under this method firms first select some areas of the representative some areas of the representative markets having similar features.markets having similar features.

• Then they carry out market Then they carry out market experiments by changing prices, experiments by changing prices, expenditure and other controllable expenditure and other controllable variables in demand function.variables in demand function.


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Statistical methodsStatistical methods

• Trend projection methodsTrend projection methods

• Barometric methodsBarometric methods

• Econometric method.Econometric method.


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Trend projection methodsTrend projection methods

• This methods is concerned with the This methods is concerned with the study of movement of variables study of movement of variables through time.through time.

• This requires long and reliable time This requires long and reliable time series data.series data.

• This is based on an assumption that This is based on an assumption that past trends will be continued to play past trends will be continued to play their part in same manner in future their part in same manner in future


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Barometric methodsBarometric methods• This construct an index of relevant This construct an index of relevant

economic indicators and to forecast economic indicators and to forecast future trends on the basis of future trends on the basis of movements in the index of movements in the index of economic indicators.economic indicators.

• Indicators areIndicators are:-:-

1.1. Leading indicators.Leading indicators.

2.2. Coincidental indicators.Coincidental indicators.

3.3. Lagging indicatorsLagging indicators


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Contd…Contd…

Graphical MethodGraphical Method

Fitting Trend Equation or least Fitting Trend Equation or least squares Methodsquares Method

Box Jenkins MethodBox Jenkins Method


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..• Leading indicatorsLeading indicators :- it moves up & :- it moves up & down ahead of some other series.down ahead of some other series.

E.g.., (i) index of net business E.g.., (i) index of net business investment, (ii) change in the value of investment, (ii) change in the value of inventories: (iii) index of prices of the inventories: (iii) index of prices of the materials .materials .

• Coincidental indicators :- Coincidental indicators :- it moves up and down it moves up and down

simultaneously with the level of general simultaneously with the level of general economic activities. e.g., (i) no.s of economic activities. e.g., (i) no.s of employees in non agriculture sector : employees in non agriculture sector : (ii) rate of unemployment ;(iii) gross (ii) rate of unemployment ;(iii) gross national products at constant prices.national products at constant prices.


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• Lagging indicatorsLagging indicators :- :-

it consist of those indicators that it consist of those indicators that follows a change after some time-follows a change after some time-lag.lag.

1.1. e.g., labour cost per unit of e.g., labour cost per unit of manufactured output,manufactured output,

2.2. Lending rates for short term loansLending rates for short term loans


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Econometric method.Econometric method.

• This method combines statistical tools This method combines statistical tools with economic theories to estimate with economic theories to estimate economic variables and to forecast economic variables and to forecast the intended economic variables.the intended economic variables.

• Methods:- Methods:-

• Regression methodRegression method

• Simultaneous equation methodSimultaneous equation method


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Mba 2 Sem Demand For Casting

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