DEMAND FORECASTING Flashcards
(21 cards)
What is demand forecasting?
Estimation of future demand for the quantity to be produced for selling in the market.
What are the purposes of demand forecasting? List them.
- Production scheduling
- Cost control
- Sales target
- Advertising policy decision
- Inventory management
- Long term planning
What are the short term objectives of demand forecasting? List them.
- Capacity utilisation
- Inventory management
- Determining price strategy
- Better financial management
- Formulation of sales strategy
What are the long term objectives of demand forecasting? List them.
- Project expansion, modernisation and rationalisation
- Long term financial planning
- Adoption of appropriate technology
- Cost reduction techniques
- Improving and strengthening product life cycle
What are the levels of forecast in demand forecasting?
- Firm
- Industry
- Macro
True or False: Forecasts are rarely perfect.
True
How does the accuracy of forecasts vary with data type?
More accurate for aggregate data than individual items.
In terms of time, when are forecasts generally more accurate?
More accurate for shorter periods than longer periods.
What are the techniques of demand forecasting?
- Survey methods
- Statistical methods
What is one method used in survey methods of demand forecasting?
Consumer survey
Fill in the blank: The method where all consumers are interviewed is called _______.
Complete enumeration
What does the opinion poll method utilize in demand forecasting?
Expert opinion
What is the Delphi method in demand forecasting?
A panel of experts fills out independent questionnaires, with results provided for adjustments.
What are the statistical methods used for in demand forecasting?
Used for long term forecasting
What is the trend projection method?
Forecasting demand based on analysis of past data using time series.
What are the reasons for changes in time series data? List them.
- Secular or long run movements
- Seasonal movements
- Cyclical movements
- Random movements
What does the barometric method consist of?
Discovering a set of series of some variable indicators that exhibit close association in their movement.
What are the types of indicators used in the barometric method?
- Leading indicators
- Coincidental indicators
- Lagging indicators
What do econometric methods combine in demand forecasting?
Economic theories with mathematics and statistics.
What is regression in econometric methods?
Bivariate or multivariate analysis to estimate demand.
What is the purpose of simultaneous equation models in econometric methods?
To develop a complete economic model explaining the behavior of all controllable variables.
