Methods of Demand forecasting for a product

There are several methods to predict the future demand. All methods can be broadly classified into two. (A) Survey methods, (B) Statistical methods

(A) Survey methods

Under this method surveys are conducted to collect information about the future purchase plans of potential consumers. Survey methods help in obtaining information about the desires, likes and dislikes of consumers through collecting the opinion of experts or by interviewing the consumers.

Survey methods are used for short term forecasting. Important survey methods are-

(a) Consumers interview method,

(b) Collective opinion or sales force opinion method

c) Experts opinion method,

(d) Consumers clinic and

(f) End use method.

(B) Statistical Methods

Statistical methods use the past data as a guide for knowing the level of future demand. Statistical methods are generally used for long run forecasting. These methods are used for established products.

Statistical methods include:

(i) Trend projection method,

(ii) Regression and Correlation,

(iii) Extrapolation method,

(iv) Simultaneous equation method, and

(v) Barometric method.