Demand Estimation and Forceasting
DEMAND ESTIMATION & FORECASTING | | | | MANAGERIAL ECONOMICS | AYESHA KHAN | ROLL NO. – 65PGDM – A25 / 9 / 12 | |
DEMAND FORECASTING –
Demand forecasting is the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data or current data from test markets. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market.
TECHNIQUES FOR DEMAND FORECASTING –
The methods used may be divided broadly into two categories, qualitative and quantitative. Demand forecasting is full of uncertainties due to changing conditions. Consumer behavior is unpredictable as it is motivated and influenced by a multiplicity of forces. Every method developed for forecasting has its advantages and disadvantages and selection of the right method is crucial to make as accurate as possible forecast. A right combination of quantitative and qualitative methods is to be used.
* Qualitative Techniques
Qualitative techniques are generally used when there is insufficient data available for quantitative analysis. They are also known as subjective methods as they are dependent upon intuition based on experience, intelligence, and judgment. They are also preferred for giving a quick estimate and cost savings.
Some of these techniques are as follows –
1. Survey Method –
The information about future demand of goods is obtained directly through a survey method. They are important for short term forecasts. Firms generally use them while introducing a new product into the market. It involves conducting consumer interviews, mailing questionnaires to consumers in order to judge their intentions about their demand for goods. Sometimes the employees, distributors and partners
DEMAND FORECASTING –
Demand forecasting is the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data or current data from test markets. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market.
TECHNIQUES FOR DEMAND FORECASTING –
The methods used may be divided broadly into two categories, qualitative and quantitative. Demand forecasting is full of uncertainties due to changing conditions. Consumer behavior is unpredictable as it is motivated and influenced by a multiplicity of forces. Every method developed for forecasting has its advantages and disadvantages and selection of the right method is crucial to make as accurate as possible forecast. A right combination of quantitative and qualitative methods is to be used.
* Qualitative Techniques
Qualitative techniques are generally used when there is insufficient data available for quantitative analysis. They are also known as subjective methods as they are dependent upon intuition based on experience, intelligence, and judgment. They are also preferred for giving a quick estimate and cost savings.
Some of these techniques are as follows –
1. Survey Method –
The information about future demand of goods is obtained directly through a survey method. They are important for short term forecasts. Firms generally use them while introducing a new product into the market. It involves conducting consumer interviews, mailing questionnaires to consumers in order to judge their intentions about their demand for goods. Sometimes the employees, distributors and partners