Question

Write your thoughts on this discussion

when it comes to the success of an organization or firm its extremely important to be able to predict the product demand of the current market. This calculation, if determined correct, will help to grow the firm’s business, grow their experience, also it will help them set a price for their product, so they are competitive. The firm uses this calculation to determine if the ability of their production efforts will meet the markets demand. If their calculation is positive, the firm can produce a large amount of a product which will make them successful, if they are unable to produce a product to meet the market’s demand then this will hurt their chances of receiving a large enough profit. When it comes to this calculation or demand forecasting, this process of predicting the future sales of a product is derived from data collected over the years to help the decisionmakers make the best and informed decision about the inventory, planning, and warehousing needs to promote the item to the market and towards the customer demands (Lopienski, 2019). An example of a successful demand forecasting that took place was, when a successful vehicle producing company researched and investigated their current sales of a specific vehicle. They also looking at past data of that specific vehicle and the style, model, trim, engine type, and color. After looking at the data presented by the research department the vehicle production company was able to predict the expected growth of the vehicle, along with predictions of the short-term demand of the product over the next twelve months (Oti-Yeboah, 2018). The firm used in the example was able to successfully sell their vehicle to the demanding market and then profit from the research and investigation work that took place. When it comes to estimating the product demand there are a few different factors that contribute. Passive demand forecasting is normally conducted by a business that has a good business structure and conservative growth plans. An active demand forecasting can be conducted with the purpose of diversifying the firm with an aggressive plan to grow the firm quickly in the market. Also, short-term demand forecasting can be conducted within a three to twelve-month period, here the firm will look at the data presented during all four seasons to accurately adjust for the market. The vehicle corporation was able to utilize passive, active, and short-term demand forecasting to predict the markets outcome and contribute a product in which all consumers will gravitate towards (Oti-Yeboah, 2018).

Answer 1

This discussion is about demand forecasting for products. Forecasting is nothing but a prediction of how many of a particular product you are going to sell in a particular month/quarter/year and how many of them in a particular geography East/West/Mid-West. Demand Forecasting helps in preparing the production capacity because if we do not know how much we would be selling we would not be able to ascertain how much capacity we need. Having an accurate forecast helps in optimizing profits because that would help in reducing stock-out or overstocking situation that incurs cost.

The deamd forecast is made through application of various statistical techniques based on the past sales data. Long range demand forecast may also take into consideration macroeconomic variables such as GDP growth. Dhort-term demand forecasts take into consideration seasonality. For example ice cream sells more in summer months than winter months. This must be factored in the demand forecast.

Here an example of an automobile company is presented which took various factors such as style, model, trim, engine type and colour of a vehicle and forecated the short-term and long-term demand accurately which helped them in increasing their profits.They were also able to predict the growth in sales accurately.

Demand forecast can be passive or active. Passive demand forecast is for stable growth of a product and active demand forecast targets agressive growth. Also a short term demand forecast can be done to factor seasonality and adjust to the market. The automobile company successfully did active, passive and short-term demand forecast accurately to increase sales and boost profitability.