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Introduction:

Demand forecasting means expectation about


the future course of the market demand for a
product.
Demand forecasting is based on the statistical
data about past behaviors and empirical
relationships of the demand determinants .
Demand forecasting gives a reliable
approximation regarding the possible outcome
,with a reasonable accuracy. It is based on the
mathematical laws of probability

SO
WHAT

IS
DEMAND

FORECASTING?

What is 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.

LEVELS OF DEMAND FORECASTIONING


MICRO LEVEL: It refers to the demand
forecasting by the individual business firm for
estimating the demand for its products.
INDUSTRY LEVEL: It refers to demand
estimate for the product of the industry as the
whole. It relates to the market demand as a
whole.
MACRO LEVEL: It refers to the aggregate
demand for the industrial output by the nation
as the whole.

TYPES OF DEMAND FORECASTING


SHORT TERM FORECASTING
Relate to a period not exceeding a year.
Usually day to day information's which are
concerned with tactical decisions under the given
resource constraints ; as in the short run, the
available resource scale of operations ,etc, are
fixed or unalterable, by and large.
In short term forecasting a firm is primarily
concerned with the optimum utilization of its existing
production capacity.

SHORT TERM FORECASTING SERVE THE


FOLLOWING PURPOSE
EVOLVING SALES POLICY

DETERMING PRICE POLICY


EVOLVING A PURCHACE POLICY
FIXATION OF SALES
TARGETS
DETERTERMING SHORT-TERM FINANCIAL
PLANNING

TYPES OF DEMAND FORECASTING


LONG TERM FORECASTING

Refers to the forecasts prepared for long period


during which the firms scale of operations or the
production capacity may be expanded or reduced.
Long term forecasting permit alternatives in the scale of
production differ from industry to industry and firm to firm.
Relates to in formations which are vital for undertaking
strategic decisions of the business pertaining to its
expansion or contradiction over a period of time.

LONG TERM FORCASTING SERVE THE PURPOSE


BUSINESS PLANNING:Long demand potential will provide the required guidelines for
Planning of a new business unit or for the expansion or
Of the exiting one. Capital budgeting by a firm is based
on the long term demand forecasting.
MANPOWER PLANNING:It is essential to determine long-term sales forecast for
an appropriate manpower planning by the firm in view of its
long term growth and progress of the business .
LONG-TERM FINANCIAL PLANNING:
In the view of the long and sales forecasting and the production
planning, it becomes easier for the firm to determine
its long-term financial planning and programmers for
raising the funds from the capital market.

Washington Policy and Analysis with the support of the


American Gas Foundation conducted the study "Fueling the
Future: Natural Gas & New Technologies for a Cleaner 21st
Century"
In 2020, emissions of carbon dioxide, the primary
"greenhouse" gas, would be reduced by an estimated 930
million tons annually if the increased use of natural gas
projected in this study is achieved.
The use of natural gas would also reduce the United States'
dependence on imported oil by an estimated 2.6 million barrels
per day
Further, due to the high quality of the natural gas system and
natural gas appliances, energy consumption is 6 percent lower
in the accelerated scenario than in the current scenario

FORECASTING METHODS

STATISTICAL
METHODS

SURVEY METHODS

Customer
survey
method

Collective
opinion
method

Reasoned Market
opinion
experiments
method
method

Graphical
method

Semiaverage
method

Time series
analysis

Moving
average
method

Regression
analysis

Least
square
method

New Opportunities and Challenges in Demand


Forecasting
To exploit an opportunity, we need to be aware of the
value of the different types of information and the
subsequent exploration of it.
1) Information on demand throughput.
2) Information on selling price and product promotion.
Changes in the selling price and the presence of product
promotions are known to have a significant effect on
demand in many industries.
3). Information on product life cycle
4) Information on the marketplace
5) Information on consumers

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