Question

Demand: You are the manager of a hardware store. One of your duties is to forecast demand for the products that the store carries. The products include items ranging from Christmas tree lights, to garden supplies to hammers and nails. Which demand pattern or patterns would you use to determine the forecast? Explain.

Answer 1

The demand patterns which I would use to determine the forecast are:

Quantitative Method: Quantitative methods rely on historical data, using these methods I can forecast future demands by analyzing past data. On the basis of past data analysis, I can find out the future demand for products that our hardware store holds. For example, I have to find out what was the demand rate in the past couple of years or more than that, on the basis of that information I will predict the current or future demand for products of our store.

Time Series Methods: Using this method, I can analyze the demands of previous years to forecast demand for the hardware products in the current year, as a time series is a collection of previous values of the variable being predicted. I have to determine the patterns of past sales to predict future demand. It may not provide the exact forecast but to some extent we will get our current and future demands.