Demand Forecasting is defined as the forecasting or anticipating the demand for the goods and services that a business organization is offering. Demand forecasting is done for long-term and short-term periods. It helps the organization in the following areas,
- To estimate the demand in future
- To increase or decrease the production
- Helps in pricing policies of the company
- Helps in sales and marketing policies
- Helps in Inventory management decisions
Techniques of Demand Forecasting
There are various techniques that are used by the managers to forecast the demand for the goods and services in the future, some of them are as follows:
01. Qualitative Techniques
Qualitative techniques are the techniques used to obtain info about likes, dislikes of consumers. Demand Forecasting for new products and existing products can be done using this method and these qualitative techniques are only suitable for short-term demand forecasting.
02. Quantitative Techniques
The quantitative techniques focus on analyzing past data and exploring it for forecasting the future demand for the product.
03. Expert Opinion Method
This method is concerned with the opinions of the experts on likely levels of demand in the future. If the forecasting is based on the opinion of several experts, then it is known as panel consensus.
04. Delphi Method
This method seeks the opinion of a group of experts through mail about the expected level of demand. The responses received are analyzed by an independent body and come to conclusion about the demand forecast estimates. This method thus takes care of the disadvantages of panel consensus where some powerful individuals could have influenced the consensus.
05. Consumers complete enumeration survey
This method is based on a complete survey of all the consumers for the commodity under consideration. Different types of interviews and questionnaires are used in this method to forecast the future demand.