Demand Forecasting
Unit 3
Sikkim Manipal University
41
Unit 3
Demand Forecasting
Structure
3.1
Introduction
Objectives
3.2
Meaning And Uses Of Demand Forecasting
3.3
Level Of Demand Forecasting
3.4
Criteria For Good Demand Forecasting
3.5
Methods Of Demand Forecasting
3.6
Survey Methods
3.6.1 Statistical Methods
3.6.2 Demand Forecasting For New Products
Self Assessment Questions
3.7
Summary
Terminal Questions
Answer to SAQ's & TQ's
3.1 Introduction
An important aspect of demand analysis from the management point of view is concerned
with forecasting demand for products, either existing or new. Demand forecasting refers to an
estimate of most likely future demand for product under given conditions. Such forecasts are of
immense use in making decisions with regard to production, sales, investment, expansion,
employment of manpower etc., both in the short run as well as in the long run. Forecasts are made at
micro level and macro level. There are different methods of forecasts like survey methods and
statistical methods generally for the existing products and for new products depending upon the
nature, number of methods like evolutionary approach substitute approach, growth curve approach
etc.
Learning Objectives:
After studying this unit, you should be able to understand the following
1. Make a comprehensive study of the conditions under which the firm is operating.
Demand Forecasting
Unit 3
Sikkim Manipal University
42
2. Have proper knowledge of both survey methods and statistical methods.
3. Adopt a suitable method to make accurate forecasts.
4. Use commonsense mainly, without relying too much on any one of the methods to arrive at right
conclusions.
3.2 Meaning And Features
Demand forecasting seeks to investigate and measure the forces that determine sales for existing
and new products. Generally companies plan their business production or sales in anticipation of
future dem