Managerial Economics Part 14 Demand Estimation and Demand Forecasting скачать в хорошем качестве

Managerial Economics Part 14 Demand Estimation and Demand Forecasting

Demand Estimation and Demand Forecasting Demand Estimation and Demand Forecasting:  Demand Estimation refers to the efforts made to quantify the demand of a product by analysis the factors which affect the demand.  Demand forecasting is a process of predicting the demand for an organization’s products or services in a specified time period in the future.  The information regarding future demand is essential for planning and scheduling production, purchase of raw materials, acquisition of finance and advertising.  It is much more important where a large-scale production is being planned and production involves a long gestation period. According to Evan J. Douglas, “Demand estimation (forecasting) may be defined as a process of finding values for demand in future time periods.” Durable Products: The products that can be used for a long time and that people do not buy very often, such as televisions and cars are called durables. Non-Durable Products: The products that do not last for a long time and that people buy often, such as bread, butter, medicine, fruits, etc. are called non-durables. These are also called single use consumer goods or perishable consumer goods. Factors affecting demand forecasting: Economic conditions: Demand forecasting can be affected by the changing price levels, national and per capita income, consumption pattern of consumers, saving and investment practices, employment level, of an economy. Condition of the industry: Concentration of an industry increases the level of competition, which directly affects the demand for products and services of different organisations in the industry. Condition of a firm: The internal condition of a business firm also affects demand forecasting. It is affected by plant capacity, product quality, product price, advertising and distribution policies, financial policies, etc. Market conditions: Changes in market conditions, such as change in the prices of goods; change in consumers’ expectations, tastes and preferences; change in the prices of related goods; and change in the income level of consumers also influence the demand forecasting. Sociological conditions: Sociological conditions, such as size and density of population, age group, size of family, family life cycle, education level, family income, social awareness, etc., also impact demand forecasts of an organisation. Psychological conditions: Psychological conditions, such as changes in consumer attitude, habits, fashion, lifestyle, perception, cultural and religious beliefs, etc. affect demand forecast of an organisation to a large extent. Foreign trade policy: The demand for export-import goods gets directly affected by changes in factors, such as import and export policy, foreign trade regulations, foreign relations etc. Objectives or Need for demand forecasting:  Producing the desired output  Assessing the probable demand  Forecasting sales figures  Better control  Controlling inventory  Assessing manpower requirement  Ensuring stability  Planning import and export policies Steps in demand forecasting:  Specifying the objective  Determining the time perspective  Selecting the method for forecasting  Collecting and adjusting data  Interpreting the outcomes