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Introduction:
Demand is dependent on many factors like market trend, competition, business environment. We cant predict exact demand. But using statistical tools, we can estimate demand, which can help us in production planning.
Objectives:
Long term objectives of demand forecasting are strategic planning, product planning, capacity and expansion planning, facility location and planning for research and development.
Medium term objectives are production and layout planning, aggregate planning, sales and marketing plans, annual, quarterly or half-yearly cash budgeting and working and operating plans.
Short term objectives are purchase planning, inventory plan, job scheduling, work force and employee planning.
Forecasting techniques:
- Delphi
- Nominal group technique
- opinion poll
- Moving average method
- Trend analysis
- Time series analysis
Delphi method:
The features are it is an attempt to develop forecasts through “group consensus”. The group size generally range from 7 to 10.
Nominal group technique:
It is similar to Delphi, but here we ask experts to sit together and explain their perspective to others so that others can also give their opinion. People frame their estimates individually, but thereafter they give justification for their opinion.
Opinion poll:
We collect information about the issue from people using opinion poll. We may take interview, we may collect data using questionnaire, or we may organize meeting / conference to find opinion of people. Variants of opinion poll are : focus group discussion which is used in marketing to know about consumer opinions.
Moving average method:
Here we take moving average of either 3 days or 5 days or 7 days and try to forecast using this moving average. We may also use smoothing to remove exceptional fluctuations Moving average is a case where data can be used to forecast on the basis of past trend.
Trend Analysis:
1. secular trend
2. cyclical fluctuation
seasonal fluctuation
random / irregular variations
Time series Analysis:
In this method, we are using time as an independent variable and predict demand using this variable
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15 Comments. Leave new
I really liked the concept. It forms the basis of market research.
nice article….but trend analysis could have been explained in a better way 🙂
Good work
A good article Padmaa. I didn’t get how Delphi method helps in forecasting. Can you explain?
In Delphi method different experts are invited and take their opinion and they finally try to find an average of their ideas. Again intimate the experts about the average opinion, and give them an opportunity to revise their forecast. Delphi is useful when you want to have an overall subjective assessment about complex business environment. All the experts are distant and they don’t know each other, therefore each one tries to give the best possible estimate
a god article.
but could have been made more interactive to retain the readers attention
Well explained article!
Nice topic chosen! Good information too!!
Quite informative
good work
Interesting one.
Nice
selection of topic is good !
precise and to the point !
liked the way it is presented in the for of points !
Well explained. 🙂