demand forecast in

8/14/2019 Demand Forecast In

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DEMANDFORCASTING

Production is often made in anticipation of demand.

ANTICIPATION of demand implies demand forecasting.

Demand forecasting means expectation about thefuture course of the market demand for a product.

Demand forecasting is based on the statistical data

about past behaviors and empirical relationships ofthe demand determinants .

Demand forecasting gives a reliable approximation

regarding the possible outcome ,with a reasonableaccuracy. It is based on the mathematical laws ofprobability


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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 thewhole. It relates to the market demand as a

whole.

MACRO LEVEL: It refers to the aggregatedemand for the industrial output by the nation

as the whole.


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THE SIGNIFICANCE OF DEMAND

FORECASTING

PRODUCTION PLANNING

SALES FORECASTING

CONTROL OF BUSINESS

INVENTORY CONTROL

GROWTH AND LONG TERM INVESTMENT

PROGRAMS

STABILITY

ECONOMIC PLANNING AND POLICY MAKING


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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 givenresource constraints ; as in te 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.


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LONG TERM FORECASTING

Refers to the forecasts prepared for long periodduring which the firms scale of operations or the

production capacity may be expanded or reduced.

Long term forecasting permit alternatives in the scale ofproduction 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.


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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 orOf 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 foran 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.


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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


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Washington Policy and Analysis with the support of theAmerican Gas Foundation conducted the study "Fueling theFuture: 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 gasprojected 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 barrelsper day

Further, due to the high quality of the natural gas system andnatural gas appliances, energy consumption is 6 percent lower

in the accelerated scenario than in the current scenario


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FORECASTING METHODS

SURVEY METHODS STATISTICAL

METHODS

Customer

survey

method

Collective

opinion

method

Reasoned

opinion

method

Market

experiments

method

Time series

analysis

Regression

analysis

Graphical

method

Semi-

average

method

Moving

average

method

Least

square

method


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DEMAND FORCASTING IN E-BUSINESS

In the economy of fierce competition on a global basis., The consumeror any potential buyer has access to information any time of the dayand more product choices than ever.

IBM has recently announced the next phase of adopting today'scomputing resources and Global connectivity technologies to run

an e-business on demand:

An on-demand e-business is embodied with end-to-end integratedprocesses across the entire company as well as with key partners,

suppliers and customers such that the value chain as a whole can

quickly respond to changes in demand, supply, customer preferences,market opportunity and competition-business technology to derivea number of benefits new revenue sources, better delivery ofproducts, and significant cost savings.


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New Opportunities and Challenges in Demand

Forecasting

To exploit an opportunity, we need to be aware of thevalue of the different types of information and thesubsequent 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 ondemand in many industries.

3). Information on product life cycle

4) Information on the marketplace

5) Information on consumers


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A MEANS TO AN END: The Profit and Revenue

Perspective

Improve the efficiency of the business includingthe bottom-line profit.

Analysis of average demand

Need for low profit productsGuidance to where and how resources forforecasting should be placed to maximize profit.Without a perspective of profit versus supply

given the demand uncertainty, it would bedifficult for the forecaster to know what isimportant to measure, what metric is needed,and what performance target to shoot for.

demand forecast in

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