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  • Introduction To (Demand) Forecasting: Bindu Malik

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    This document provides an overview of various forecasting methods including qualitative, time series, and causal methods. Qualitative methods incorporate subjective factors like intuition and experience, while time series methods analyze past consumption trends to project the future. Causal methods relate demand to economic drivers like income, price, and leading indicators. Specific techniques are discussed including jury of executive opinion, Delphi method, trend projection, exponential smoothing, chain ratio method, consumption level method, end use method, Bass diffusion model, leading indicators, and econometric models. Challenges in forecasting like uncertain data and environmental changes are also noted.

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    Forecasting

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    This document provides an overview of various forecasting methods including qualitative, time series, and causal methods. Qualitative methods incorporate subjective factors like intuition and experience, while time series methods analyze past consumption trends to project the future. Causal methods relate demand to economic drivers like income, price, and leading indicators. Specific techniques are discussed including jury of executive opinion, Delphi method, trend projection, exponential smoothing, chain ratio method, consumption level method, end use method, Bass diffusion model, leading indicators, and econometric models. Challenges in forecasting like uncertain data and environmental changes are also noted.

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    23 views21 pages

    Introduction To (Demand) Forecasting: Bindu Malik

    Uploaded by

    1dudearun
    This document provides an overview of various forecasting methods including qualitative, time series, and causal methods. Qualitative methods incorporate subjective factors like intuition and experience, while time series methods analyze past consumption trends to project the future. Causal methods relate demand to economic drivers like income, price, and leading indicators. Specific techniques are discussed including jury of executive opinion, Delphi method, trend projection, exponential smoothing, chain ratio method, consumption level method, end use method, Bass diffusion model, leading indicators, and econometric models. Challenges in forecasting like uncertain data and environmental changes are also noted.

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    Introduction to (Demand) Forecasting

    Bindu malik

    Forecasting Methods
    Qualitative (Subjective): Incorporate factors like the forecasters intuition, emotions, personal experience, and value system. These methods include:
    Jury of executive opinion Delphi method Consumer market surveys

    Time series projection method


    1. Trend projection method 2. Exponential smoothing method 3. Moving average method

    Causal methods
    1. 2. 3. 4. 5. 6. Chain ratio method Consumption level method End use method Bass diffusion model Leading indiacator Econometric method

    Jury of executive opinion


    Opinion of a group of managers is combined into sales estimate Expeditious method Permits consideration of variety of factors Biases Reliability is questionable

    Delphi method
    Eliciting the opinion of group of experts by mail survey. More accurate and less expensive than face to face meetings

    Trend projection method


    Determining the trend of consumption by analysing past data Projecting future consumption by extrapolating the trend- graphical, least square, moving average.

    Exponential smoothing method


    Forecasts are modified in the light of observed error. F-t, s-t, ,-t - smoothing parameter -t : error in forecast

    Chain ratio method


    Sales may be estimated by applying a series of factors to a measure of aggregate demand. It uses a simple analytical approach E.g. a firm planning to mfr. Stainless steel blades in india tried to estimate its potential sales in the foll. Manner:

    1. Adult male population in india: 150 million 2. Prop. Of males using shave blades: 0.60 million 3. Adult male using shave blades: 90 mill. 4. No. of times in a yr a person uses blade:100

    5. Total shavings done: 9000million 6. prop. Of shavings done with stainless steel blades: 0.40 7. Average no. of shavings with shaving blade: 4 8. No. of stainless steel blades: 600 million 9. Prop. Of stainless steel market: 0.20

    Consumption level method


    Useful for a product which is directly consumed Estimates the consumption level on the basis of elasticiti coeffecients 1. Income elasticity of demand 2. Price elasticity of demand

    End use method


    Suitable for estimating demand of intermediate products, Following steps: 1. Identify the possible uses of a product 2. Define the consumption coeffecient for various uses. 3. Project the output level. 4. Derive the demand

    Difficulties:
    Consumtion coeff. Varies from one period to another. Diff. to estimate the projected output.

    Bass diffusion model


    Developed by frank bass. For new products The coeffecient of innovation-p The coeffecient of imitation-q

    Leading indicator methid


    Leading indicator: those that change ahead of other indicators called lagging indicators E.g change in the level of urbanisation( leading indicator) may be used to predict the change in demand of flats( lagging indicator)

    Contd
    1. Identify the leading indicator 2. Lead-lag relationship does not remain stable.

    Econometric method
    Forecast the future behaviour of econometric variables in the model: two types 1. Single equation model 2. Simultaneous equation model

    Single equation model


    One variable i.e dependent variable is influence by two or more independent variables

    Simultaneous equation model


    Economic relationship in terms of more than one equation.

    Uncertainities in forecasting
    1. Data about past & present market 2. Methods of forecasting 3. Environmental change

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