Demand Forecasting
Essay by jeevan2904 • August 21, 2019 • Course Note • 578 Words (3 Pages) • 2,269 Views
OBJECTIVES
1. To understand the forecasting process when trend exists in demand.
2. To study a case involving downward trend of demand.
3. To learn the technique of trend projection.
4. To learn the technique of standard error of the estimate.
LEARNING FROM THE CLASS
The session gave us a brief description regarding the context of demand forecasting with explanation and
practical examples. It taught us about the concept of demand forecasting and its application in the
companies. Learned trend projection method, correlation and standard error of the estimate.
SUMMARY OF THE TOPICS
Demand forecasting means predicting future events or demand used in planning process.
We begin with different types of demand patterns.we examine forecasting method in three basic categories:-
A. Judgement
B. Casual
C. Time-series method
In thjs session we learnt following 6 topics-
Trend projection
Least square method
Associative forecasting
Correlation
Coefficient of determination
Multiple regression analysis
Standard error of the estimate
We will see all these one by one in next page…...
TREND PROJECTION
Trend projection method is the most classical method of business forecasting, which is
concerned with movement of variables through time.
This method requires a long time series data.
Linear trends can be determined using the least square technique:
LEAST SQUARE METHOD
Least square method minimises the sum of the squared errors(deviation).
y=a+bx
where,
y=computed value of the variable to be predicted
a=y-axis intercept
b=slope of trend line
x=independent variable
The deviations can be negative or positive.
ASSOCIATIVE FORECASTING
Used when changes in 1 or more independent variable can be used to predict the changes in the
dependent variable.
CORRELATION
Checks the bond between the variables.
Denoted by r.
Values range from -1 to +1.
COEFFICIENT OF DETERMINATION
Measures the percent of change is y predicted by change in x.
Denoted by r 2 .
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