Welcome To

Our Project

Topics which are included:

1) Statistical Methods

- Karan

2)Proportional Change Method

3)Econometric method

4)Linear Functions

- Prithviraj

5)Simple linear functions

- Nikhil

6)Characteristics of a good forecasting method

- Vishal
- Akash

- Suraj

Statistical methods
Karan
Business firms use statistical methods of demand forecasting as they

are considered more accurate and scientific. Some of the important

ones are listed down below.
1) TIME SERIES ANALYSIS- It is widely used by business firms. It
simply assumes past behaviour of the variable and that it will continue
in the future also. The data is related to a time period. The changes in
the variable over a period of time are divided into four components.
a) Trends- change in population, tastes and preferences.
b)Seasonal variations-It happens due to change over a period of
time.
c)Cyclical variations Fluctuations are caused due to ups and downs.

d)Random Fluctuations- other factors which do not fall under the

above categories.

PROPATIONAL CHANGE MODEL

-VISHAL

This model considers present change and it is added to the past value.
In other words future demand is expressed as sum of past demand and
changes in demand in the current period.
Other methods are:1) Method of moving averages
2) Method of least square.

The popular equation used is Y= a+ bx.

NUMERICAL EXAMPLE:-

From the following data,demand for commodity X can be

forecasted for the year 2010,2011 and 2012 by using moving
averages.

The above information has to be plotted on a graph with

years on the X axis and moving averages on the Y axis. The
moving average curve will indicate the trends.

Econometric Method
Akash
This method combines economics and statistics. It explains the cause and

effect relationship between economic variables and change in variables

can be quantitatively measured.

Regression Analysis Method:

*
The statistical method most frequently used to estimate demand is
regression analysis. There are various steps in it.
1)The first step is to specify the independent variables like price and
income.
2)The second step is to make accurate estimates of the variables.
3)To specify the form of equation or the way in which the independent
variables mentioned earlier are assumed to interact to determine the level
of demand.

Linear Functions
-Prithviraj
The most common relationship(i.e., linear function) is as follows.

Q=a+bP+cA+dY

The quantity demanded is assumed to change linearly with changes in

each of the independent variables. It is a very convenient statistical
technique.

Power Functions:
The second most commonly specified demand relationship is the
multiplicative form.
Q=aPb AcYD

Simple Linear Regression

-Nikhil
The dependent and the independent variable have to be identified first.

Then the regression analysis and the form of equation are to be

selected.
Example:A linear demand function is expressed as follows.
Qx= a + bPx
where Qx refers to quantity demanded of X.
a is the intercept which remains constant.
Px is the price of the commodity.
b is the coefficient which indicates the extend of change in demand
due to change in price.

Characteristics Of A Good Forecasting Method

-Suraj

Every business firm is in need of a good forecasting method. Depending

on their objectives, business firms select a particular method. The
characteristics of good method are:-

1)simplicity is an important characteristic of a good forecasting method.

2)Accuracy as its important to get accurate results to be more reliable
one.
3) Economy as it involves least cost and at the same time gives good
results.
4)The ability to give quick results as if the business involves to many
complexities then it will not be preferred by business firms.

Thank You
- the end