Question

Discuss the purposes of Demand Estimation.

Answer 1

1.Formulation of production units ds

A firm needs to know how much they expect to produce in the financial period so that they can be prepared accordingly

2.Formulating price policy

With the demand estimation in ahd a firm can decide how much to produce and how much other competitiors might produce to estimate what the cost and market price would be to the firm

3.Sales decision

With the demand estimation the sles force can be prepared accordingly , this imporves efficiencly as they would know what to expect.

4.Arranging finance

Production requires fiancing. Knowing the demand fims know how much they can produce and how much it will cost. With a budget in hand they can understand what source and how much to finance from internal and external sources

5.Deciding the production capacity

The production capacity will help the firm understand how much profits they could be making in the time period and what challendges it might face .

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