DEMAND FORECASTING TECHNIQUES

methods of forecasting
FORECASTING METHODS
SURVEY METHOD
METHOD
Opinion
Barometric
Survey
method

Complete
enumeration

Consumers
Interview

Sample
survey

STATISTICAL

Trend
projection

End use
method

Correlation &
regression

SURVEY METHOD
Information about the desires of
the consumers and the opinions
by interviewing them.
Short - term forecasting depends
heavily on this methods.

OPINION SURVEY METHOD

It is also known as sales - force
composite method or collective
opinion method.
In the firm; salesmen are the
persons who are very close to
customers and these sales men
can know and feel the customers
reaction.

CUSTOMERS INTERVIEW METHOD

This is done by directly interviewing
the consumers.
Asking them about their plans and
preferences regarding the
consumption of the product.
Norman F. Dufty, this approach is
passive, it does not expose and
measure the variables under
managements control.
Joel Dean opines that consumers
plans are fragile, capricious and
expensive to collect. 3 types

COMPLETE ENUMERATION METHOD

An interview of all the consumers of
the product under forecast is taken.
Sum total of individual expected
demands gives the demand forecast
for the product.

SAMPLE SURVEY METHOD

This method is useful for sample of
consumers for interview.
Sampling may be random sampling.
Success depends on making the
correct sampling.

END USE METHOD

We can find out the demand for the
end use of the product and obtain
demand separately for different
sectors such as individual industries,
final consumers, export and import,
etc
Requires industries to furnish their
production plans and input-output
coefficients.

STATISTICAL METHOD
Use the past data as a guide for
future demand.
Long term forecasting makes
use of this methods.

TREND PROJECTION METHOD

Also known as time series analysis.
Past data is arranged chronologically
with regular intervals of time.
This type of data is called time series.
Involves procedures for decomposing
the original sales series (y) into
components, trend (T), season (S),
cycle (C), and irregular events (I)
Y=T+S+C+I.

REGRESSION AND CORRELATION

METHOD
One has to ascertain the variables
which determine the variable under
forecast.
One independent variable simple
correlation.
Several independent variable
multiple correlation.
Regression equation of y on x :
y=a+bx.

BAROMETRIC METHOD

Events of the present are used to

predict the directions of change in
future.
Done by the use of economic and
statistical indicators.
Types : i. Leading Series ii.
Coincident series
iii. Lagging series

FEATURES OF A GOOD FORECASTING

METHOD

Plausibility
Simplicity
Economy
Availability