Type of goods and Step forecast of demand
Demand Forecast means predicting the future demand of a product. Information about the future demand is necessary for the production, advertising, planning and planning to get raw goods and finance. It’s more important where mass production is planned.
Information about the future demand is also necessary for existing firms to avoid production less or more.
Demand forecasting is a special type of economic forecast. He discussed various types of forecasts as follows:
1. Economic and non-economic forecast: forecast can be related to economic or non-economic events. Sociologists talk about ‘social’ and ‘technical’ forecast. Sometimes they also make a ‘political’ prediction. For example, a technical obsolete, election results or even a crime rate in society. These are examples of all non-economic forecasts. However, the technical forecast can have a deep connection to the product. economy. New technology can create demand for new
2. Micro and mild forecast: Economic forecast can be done at various levels – firm, industry or economy. At the firm and industry level, we need demand or sales forecast. This is called micro-level, on the other hand, at the level of economy, five year plans are based on forecasts about investment, employment and national income known at large level.
3. Active and inactive forecast: If the forecast is made based on previous data about the future, it is called inactive forecast. For example, if the company forecasts the demand for next year based on the previous year’s record, it’s known as inactive forecast. On the other hand, the change in demand is estimated by a change in price, product quality, advertising etc. is an example of a ‘active’ forecast.
Short term and long term forecast: Forecast may be for short term or for long term. Duration of the duration depends on the problem. In case of sales, short-term forecasts are usually made which may be limited to one year.
On the other hand, the introduction of a new product includes a long-term forecast because in this case, we have to consider the population, taste and long-term changes in buyers’ preferences, technology, etc. Short-term forecast focuses on some selected variables. And simple technologies based on the analysis of previous experiences and information here can give us an accurate forecast.