Name: Sabido, Haidee F.

Section: 1
Seat No.: 28 Date: June 27, 2019

Assignment #1

1. Demand Analysis
● The concept of demand is the basic concept in modern economics which acquaints
a manager with the relationship between the price of a commodity and its quantity
which could be purchased at a given price by consumers. The study of such a
relationship provides the manager with necessary facts which could be analyzed
for measuring the forces that influence sales volume.

Terminologies:
Demand - The ability and willingness to buy a specific quantity of a commodity at
the prevailing price in a given period of time.
Law of demand - The quantity of a commodity demanded in a given time period
increases as its price falls, ceteris paribus.
Demand schedule - a table showing the quantities of a good that a consumer is
willing and able to buy at the prevailing price in a given time period.

Demand Curve - A curve indicating the total quantity of a product that consumers are
willing and able to purchase at the prevailing price level, holding the prices of related
goods, income and other variables as constant. A demand curve is a graphical
representation of a demand schedule. The price is quoted in the ‘Y’ axis and the quantity
demanded over time at different price levels is quoted in ‘X’ axis.
The demand curve, (DD) is downward sloping curve from left to right showing that as
the price falls, quantity demanded rises. This inverse relationship between price and
quantity is called the law of demand. When price changes, there is said to be a
movement along the curve from point A to B.

Shift in Demand - Shift of the demand curve occurs when the determinants of demand
change. When tastes and preferences and incomes are altered, the basic relationship
between price and quantity demanded changes (shifts). This shifts the entire demand
curve upward (rightward) and is called as increase in demand because more of that
commodity is demanded at that price. The downward shift (leftward) is called as a
decrease in demand.

Elasticity of Demand
Price Elasticity - The response of the consumers to a change in the price of a
commodity is measured by the price elasticity of the commodity demand. Income
Elasticity - Income elasticity of demand measures the responsiveness of quantity
demanded to a change in income.
Cross Elasticity - The quantity demanded of a particular commodity varies according to
the price of other commodities. Cross elasticity measures the responsiveness of the
quantity demanded of a commodity due to changes in the price of another commodity.

2. Estimating Demand
● The science and art of converting the qualitative understandings of a market into
quantitative data.
 A. How much to sell
Fixing the product wise , crop wise, month wise, and year wise targets for sale of
inputs. The targets may also be fixed for different types of fertilizers varieties of
seeds and brands & types of CPPs
B. Where to sell
Geographical area -Identification of market area i.e.provinces,districts,group of
villages etc.
Product range - determination of inputs based on crops grown-cereals, fruits or
vegetables or livestock.
Profile of customers - large, commercial or small scale farmers. Export growers,
wheat milles,or food processors etc.
C. When to sell
● To determine the period of peak, low and no demand
● To determine if inputs will be used
● To determine if inputs are needed for general use or for special requirements

Methods of Demand Estimation

Survey of buyers intention method - Relies on the information base of “what people say
and with the use of questionnaires.
Composite sales staff opinion method - Based on the belief that sales staff can provide
correct estimates of their Sales territories.
Expert opinion method - Believes that experts, research agencies,
advisors,consultants,opinion leaders and sales executives maintain useful information
and area good source

3. Business Forecasting
● Business forecasting generally attempts to predict future customer demand for a
firm’s goods or services
● Macroeconomic forecasting attempts to predict future behavior of the economy
and identify business cycle turning points.
Forecast Method
A. Qualitative - Judgement. Useful for long forecast horizons and/or when the
amount of historical data is limited.
B. Quantitative - Make use of historical data & of a forecasting model.

Components of Demand Forecasting: two main factors help determine the type of
forecasting method to be used:
-Time Frame
-Behavior & Possible Existence of Patterns

Terminologies:
Time Series - A set of chronologically ordered points of data.In forecasting a time series
it is generally assumed that factors which caused demand in the past will persist into the
future.
Decomposition Techniques - Separating a time series into several unobservable
components, generally in an additive or multiplicative fashion.Such components usually
include a trend, seasonal, cycle, and residual or irregular.
Seasonal Component - Regularly occurring, systematic variation in a time series
according to the time of year.Not found in annual data, or data of lower frequencies.
Trend Component - The tendency of a variable to grow over time, either positively or
negatively.
Cycle - Cyclical patterns in a time series which are generally irregular in depth and
duration.Such cycles often correspond to periods of economic expansion or
contraction.Also known as the business cycle.
Irregular Component - The unexplained variation in a time series.

All organizations operate in an atmosphere of uncertainty but decisions must be made

today that affect the future of the organization. There are various ways of making forecasts
that rely on logical methods of manipulating the data that have been generated by
historical events. A forecast is a prediction or estimation of a future situation, under given
conditions. Business forecast will help the manager to take the following decisions
effectively.
References:
N.A. (n.d.). Demand Analysis: Meaning of Demand. Retrieved from
http://www.yourarticlelibrary.com/economics/demand/demand-analysis-
meaningof-demand/38927
N.A. (n.d.). Managerial Economics. Retrieved from
http://www.sxccal.edu/TwinningProgramme/downloads/MBA-ManagerialEconomi
cs-1stYear.pdf
N.A. (n.d.). Methods of Demand Estimation. Retrieved from
https://afghanag.ucdavis.edu/other-topics/files/market/demand-estimation.pdf
N.A. (n.d.). Introduction to Forecasting. Retrieved from
http://gauss.stat.su.se/gu/e/slides/MJK_ch1.pdf