demand estimation and demand forecasting
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Group A
Muhammed FarisHamdan
JasimMansoor
SAFI Institute of Advanced Study
Paper PresentationB.Com first semester
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Agenda
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Demand estimation
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Demand estimation
•Uncertainty in business activity.
•Risk involved in the business activity.
•Success depends upon estimation and forecasting
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Demand estimation
•To understand the functional relationship between demands and its various determinants.
•The estimation of quantitative nature of demand and the its determinants.
•Demand function –> Q = f( Px, Y, Pr, Ad,etc)
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Demand estimation
1.Identification of variable: Depended and independent variables
2. Development of model : Mathematical equation
3. Collection of data: Primary and Secondary sources of data
4. Estimation of parameter of the model
5. Development of estimates based on the model
Q = α1 - α2Px + α3Y+ u
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Demand estimation
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Demand estimation
The model can not be exact
Quantitative and qualitative nature of consumer behaviour
Indifferent consumer behavior
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Demand forecasting
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• Estimating the anticipated future value of demand on the bases of past data.
• Long-run forecasting cover 5,10 or 20 years and short-run cover 3 months or 6 months.
Demand forecasting
• What will be sale of gold in the next three year….
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• To prepare suitable sales and production policy
Demand forecasting
• To ensure the purchase of raw material and minimize the cost
• Setting sale target and utilization of maximum recourses
• To determine appropriate Advt. policy and promotion program.
• Appropriate production scheduling to avoid the over production
• It help to determined suitable price policy
• To determined financial requirement
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Demand forecasting
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Demand forecasting
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Demand estimation
• If the forecaster is inefficient or inexperienced, the result may be worng
• Demand depends to large no. of independent variables
• Demand depends upon psychology of consumer
• It is only a estimation, a certain amount of error is always there
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Our special Thanks
Mr. SABU K.T.Dept. of Economics
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