Demand Forecasting is predicting the future demand of our product in advance for a specific period of time on the basis of past historical data and current trends.
It is useful in
(1).Planning production of goods.
(2).Budgetary Planning.
(3).Suitable pricing and ad strategies.
(4).avoiding wastage of products/goods
Forecasting will vary depending upon kind of products for example
(1). Consumer Durable goods
(2).Non Durable Consumer goods
(3).Producer Goods/Capital Goods
Forecasting can be done at different Levels viz
(1).Industry Level
(2).Firm Level
Forecasting can be for different time frame
(1).Short term (6 months to 1 Year)
(2). Long term (2 to 5 years)
Methods of Demand Forecasting
(1). Qualitative Method (Survey Method)
(2). Quantitative Method (Statstical Method)
- Qualitative Methods:-
(a). The Delphi Technique or Expert opinion Method
(b). Sales Force Opinion/ Collective Opinion Method/ Grass-root Method
(c).Market Research/ Survey of Buyer’s intention Method
- Quantitative Methods
(a). Trend Projection Method
(b) Barometric Method
(c). Regression Method
Relationship is created between demand and factors affecting demand and then demand projection is calculated.