Skip to main content

Demand Forecasting

Demand forecasting is a systematic process involving anticipation of demand for the commodity or services of a company in the future under certain competitive forces and uncontrollable forces.

According to Evan J Douglas. "Demand forecasting is an estimate of sales during a specified future period based on the proposed marketing plan and a set of particular uncontrollable competitive forces."

Significance of Demand Forecasting:

  • It fulfills the objective or organization and helps in the preparation of the budget.
  • It establishes production and employment in the organization.
  • It helps in expansion or organization and facilities managerial decision.

Objectives of Demand Forecasting:

Short-term Objectives:

  • Production policy
  • Price policy
  • Controlling sales
  • Arranging finance
Long-term Objectives:

  • Determination of production capacity
  • Planning long-term activities

Factors Affecting Demand Forecasting:

  • They can be producer goods, consumer goods or services. It is dependent on information about the availability of substitutes, demand etc.
  • The level of competition affects forecasting as if the level is high, there is a risk of new competitors entering the market, which makes forecasting difficult.
  • Level of technology available with the organization and in the market. The rapid change in technology makes products obsolete.
  • If the country/economy is facing a boom or economic development then there will be an upsurge in demand forecasting.

Steps in Demand Forecasting:

Setting the Objective: It comprises decisions about whether forecast should be done for a single product or an entire line of product, market share of the company etc.

Determination of Time Period: Determining whether the forecast is to be done for a long period or a short period. In the long period, the factors affecting demand change significantly, while in the short-run they remain constant.

Selection of Method of Forecasting: An organization selects a method on the basis of its own data requirements, purpose and the availability of time.

Collection of Data: The organization collects either primary data collects through questionnaires, interviews and observations or secondary data, i.e. which has been published by other organizations.

Estimation of Result: The final result is the estimate of the demand for the stipulated years. The results should be clear and understandable by the management.


Popular posts from this blog

How to identify Calculator is Programmable or Non-Programmable Calculator ?

Some competitive examinations allow the use of a calculator but may permit to use of only a calculator of the non-programmable type. Calculators that are NOT programmable: This is what a non-programmable calculator looks like. List of non-programmable calculators of some famous brands like  Casio , Sharp , Texas Instruments , Hawlett Packard . Calculators that are programmable: Programmable calculators can automatically carry out a sequence of operations under the control of a stored program, much like a computer. Examples of the programmable calculator are at the top picture. These calculators runs on a Computer Algebra System (CAS). A CAS helps to make certain difficult algebraic functions automatic and less tedious. As you can see, these calculators also have graphing capabilities. A calculator with graphing capabilities is most likely to be programmable. The easy way to tell if the calculator has graphing capabilities is by looking at the larger screen than would

Flood and Drought Affected Areas in India

In India, the regional and seasonal distribution of rainfall is uneven. On the one hand, Jaislamer receives less than 9 cm of annual rainfall and on the other hand, Mawsynram, near Cherapunji, receives more than 1140 cm of annual rainfall. Similarly, most of the rainfall in India is received in the months of June, July, August and September. Generally, variations in the amount of rainfall are found more in the regions where the rainfall is uneven and less and these regions are more affected by droughts. Droughts Drought is an abnormally long dry season, which creates a clear imbalance in the availability of water. both, the vagaries of monsoon and dominant factor, which cause drought and drought like conditions. The irrigation commission, on the basis of the amount of rainfall and its variability, has divided the drought affected areas into two types: Drought Areas: Drought areas have annual rainfall less than 50 cm and variability is more than 25%. Under these areas are in

The Advent of European Companies in India

In 1453, land routes were blocked by Ottoman Turks. So, new sea routes discovered by the Europeans to promote their business. Colombus of Spain discovered America where as in 1498, Vasco-da-Gama of Portugal discovered India. He came to India via Cape of Good Hope (Africa). First of all, Vasco-da-Gama reached to Calicut (Kerla or Kozhicode) where Zamorin ruler welcomed his arrival. The Portugese soon established political power along the west coast of India. he was succeeded by Captain General Alfonso de Albuquerque who conquered Goa in 1510. Sequence of Arrivals:- Company Year H.Q./Capital Potugese East Indian company (Formed by Vasco-da-Gama) 1498 Cochin (1510-30), Goa (1530-1961) Dutch East India Company 1602 East coast; Coromandal, Pulicut, Bengal English East India Company 1608 West coast: Surat, Bombay east coast: Coromandal, Masulipatanam, Madras. French East India Company (Formed by Colbert) 1664 Surat (1668-73), Pondi