GRADED ACTIVITY NO. 1 (Assignment No.

1) Final Period

Topic: Demand Estimating and Forecasting (Part 1)

This is 100 points graded activity. Do the following:
1. Write your takeaways and insights about demand estimating and forecasting Taking into
consideration the following matters: (70 pts.)

a. Comparison of demand estimating and demand forecasting

The Demand Estimating process examines how a change in price in the future will affect the quantity
that is demanded. Demand estimating refers to any technique used to simulate how customer behavior
changes in response to shifts in the product's price, consumer income, or any other factor that affects
demand. Demand forecasting is the process of estimating and predicting customers' future demand for
a product or service through predictive analysis of previous data. In reality, demand functions for a
specific market must be determined using empirical data. Demand forecasting assists the company in
making more informed supply choices that predict the overall volume of sales and revenue over the
next few months.

b. Relationship of demand estimating and demand forecasting

Demand Estimating and Demand forecasting are related in that a manager of demand estimation
studies how a change in pricing in the future will affect the quantity of goods demanded. By using data
from the past and the present, demand forecasting can predict the predicted level of demand at a
specific future time.

c. Features of demand forecasting

Demand forecasting is an important part of marketing. It helps you understand your customers' needs
and helps you plan for the future, based on past data and trends. Demand forecasting helps you predict
what your customers will want, so that you can provide them with products they need in a timely
manner, while also keeping costs down. You can use demand forecasting to help determine when to
release new products, how many products to manufacture or sell, and which ones to carry at any given
time.

d. Demand forecasting process

Demand forecasting is one of the most important processes in a business. It allows companies to
optimize their inventory by predicting future sales, making informed business decisions about
everything from inventory planning and warehousing needs to running flash sales and meeting customer
expectations. Demand forecasting is a predictive analysis of historical data that allows you to estimate
and predict customers’ future demand for a product or service.
e. Determinants of demand forecasting

Demand for consumer durables and capital goods are derived from one another. Different factors affect
each of these things differently. The need for consumer durables drives demand for capital goods
(industrial buildings, machinery, and equipment) (residential buildings, cars, refrigerators, furniture).
The degree of capacity utilization, wage rates, and market size, as well as the growth rate of the
consumer industry, all influence the demand for various kinds of capital goods. Before calculating the
demand for capital goods, one should take the industry's potential for expansion into account.
Consumer durable product demand, including that for homes, vehicles, and refrigerators, is influenced
by factors like social standing, reputation, income levels, rates of obsolescence, maintenance costs, the
accessibility of highways, and the availability of gasoline and power (if electricity is available). When
predicting consumer durables demand, one should take these factors' patterns into account. When non-
durable consumer items (such milk and food) are substitutes or supplements to other products, their
demand is influenced by price elasticity as well as households' disposable income levels or purchasing
power.

2. Explain the importance of demand estimating and forecasting to managers. (30 pts.)

Demand forecasting and estimation are vital to the success of any business. The purpose of demand
forecasting and estimation is to make sure that a company is not only able to produce a product at the
right time, but also prepare for various inputs and pursue optimal pricing strategies. If we don't have
accurate information about future demand, we may end up producing an excessive amount of products
or setting low prices that do not result in profits. Demand forecasting and estimation help managers in
decision-making regarding production, sales, investment, expansion, and employment. In short, the
importance of demand forecasting and estimation is to reduce future risk for a business.