Answer to Question #215182 in Economics for prakash reddy

Question

“Demand forecasting is an important tool for predicting the demand for an organization’s products or services in a specified time period in the future” Enumerate any three needs for demand forecasting and discuss the steps involved in demand forecasting.

Answer 1

Demand can be conditionally divided into dependent and independent. The independent part of the demand is associated with the internal logic of the product, market, etc. This is consumption in an equilibrium state of the system, when consumers are not affected by promotions, product shortages in our country or competitors, etc. Dependent demand - corrections related to external influences ...

When forecasting sales, it is important to consider both dependent and independent demand. At the same time, mathematical forecasting methods are primarily associated with the concept of independent demand. To account for the addict, various expert estimates are often used.

As a result, the process of making a sales forecast can be as follows:

The analyst/economist / PEO employee draws up a plan based on historical sales statistics (i.e., prepares an independent demand forecast).

Sales managers/marketers/head of sales/designers refine the forecast of independent demand in accordance with their vision of the product, relationship with the client, the situation as a whole (i.e., they receive a forecast taking into account dependent demand).

The assessments of different experts are brought together, a decision is made which of the assessments to take into account, the sales forecast is approved.