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Demand forecasting

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Bhushan Vijay Phirke presented on the topic of demand forecasting to the MBA department at Rajarshi Shahu College of Engineering on April 13, 2020. Demand forecasting is the process of estimating the quantity of products or services that consumers will be willing to purchase. There are informal methods like educated guesses as well as quantitative methods using historical or current test market sales data. Demand forecasting is used for pricing decisions, assessing future capacity needs, and deciding whether to enter new markets. It provides essential information for producing the right quantities at the right time and maximizing profit.

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JSPM’s Rajarshi Shahu College of Engineering Tathawade , Pune:33 Presentation on Topic: “ Demand Forecasting ” Department of MBA Date: 13.04.2020 Presented By : Name of student: Bhushan Vijay Phirke Roll Number: 191415 Subject : Operation & Supply chain management (MBA-Sem II)

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Demand Forecasting

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Demand Forecasting • Meaning: It is the activity of estimating the quantity of Products and/ or Services required that the consumer will be willing to purchase. • Techniques: Demand forecasting techniques involves:- 1. Informal methods such as Educated Guesses 2. Quantitative methods such as the use of Historical sales data or current data from the test markets

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Applications of Demand Forecasting • Demand forecasting may be used in :- 1. Making pricing decisions 2. Assessing future capacity requirements 3. In making decision to whether to enter a new market or Not.

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Demand forecasting

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Forecasting Time horizons Time Period • Short term 1. 3 – 6 months, Operating decisions 2. E.g. Production planning • Medium term 1. 6 months to 2 years, Tactical decisions 2. E.g. Employment changes • Long term 1. Above 2 years, Strategic decisions 2. E.g. Research and Development

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Sources of data for Forecasting

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Accuracy of forecast • 1) The accuracy of the forecasts can only be practically measured against available data; however, when the data is available, those forecasts aren’t true forecasts anymore, being statements about the past rather than being statements about the future. Thus, those measurements are referred as the empirical accuracy, as opposed to the real accuracy.

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Popular Accuracy Matrices 1. MAE (mean absolute error) 2. MAPE (mean absolute percentage error) 3. MSE (mean square error) 4. sMAPE (symmetric mean absolute percentage error)

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Capacity planning • Forecasting and capacity planning ensure that resource are managed so that customer demand is met in the right amount, at the right time, with the right quality. • Demand forecasting helps companies determine the supply of products and services needed to meet customer demand. • Any adjustments to the overall capacity of operations are made based on long-range customer demand forecasts and the organization's current capacity to meet them.

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Conclusion • Importance of Demand forecasting: 1. Essential to Produce the Required Quantities at the Right Time 2. To Adopt Suitable Price Policy 3. It is Helpful in the Maximization of Profit 4. Increased Customer Satisfaction 5. Better Shipping or Logistics Management

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Demand forecasting

  • 1. JSPM’s Rajarshi Shahu College of Engineering Tathawade , Pune:33 Presentation on Topic: “ Demand Forecasting ” Department of MBA Date: 13.04.2020 Presented By : Name of student: Bhushan Vijay Phirke Roll Number: 191415 Subject : Operation & Supply chain management (MBA-Sem II)
  • 3. Demand Forecasting • Meaning: It is the activity of estimating the quantity of Products and/ or Services required that the consumer will be willing to purchase. • Techniques: Demand forecasting techniques involves:- 1. Informal methods such as Educated Guesses 2. Quantitative methods such as the use of Historical sales data or current data from the test markets
  • 4. Applications of Demand Forecasting • Demand forecasting may be used in :- 1. Making pricing decisions 2. Assessing future capacity requirements 3. In making decision to whether to enter a new market or Not.
  • 6. Forecasting Time horizons Time Period • Short term 1. 3 – 6 months, Operating decisions 2. E.g. Production planning • Medium term 1. 6 months to 2 years, Tactical decisions 2. E.g. Employment changes • Long term 1. Above 2 years, Strategic decisions 2. E.g. Research and Development
  • 7. Sources of data for Forecasting
  • 8. Accuracy of forecast • 1) The accuracy of the forecasts can only be practically measured against available data; however, when the data is available, those forecasts aren’t true forecasts anymore, being statements about the past rather than being statements about the future. Thus, those measurements are referred as the empirical accuracy, as opposed to the real accuracy.
  • 9. Popular Accuracy Matrices 1. MAE (mean absolute error) 2. MAPE (mean absolute percentage error) 3. MSE (mean square error) 4. sMAPE (symmetric mean absolute percentage error)
  • 10. Capacity planning • Forecasting and capacity planning ensure that resource are managed so that customer demand is met in the right amount, at the right time, with the right quality. • Demand forecasting helps companies determine the supply of products and services needed to meet customer demand. • Any adjustments to the overall capacity of operations are made based on long-range customer demand forecasts and the organization's current capacity to meet them.
  • 11. Conclusion • Importance of Demand forecasting: 1. Essential to Produce the Required Quantities at the Right Time 2. To Adopt Suitable Price Policy 3. It is Helpful in the Maximization of Profit 4. Increased Customer Satisfaction 5. Better Shipping or Logistics Management