Demand forecasting is not a speculative exercise into the unknown. It is essentially a reasonable judgement of future probabilities of the market events based on scientific background. Explain the statement by elaborating different qualitative and quantitative methods of demand forecasting.
Answers
Qualitative methods of demand forecasting does not include any mathematical tools or data.
It is based on the vast experience and technical know of marketing experts or managers.
Some qualitative methods are market research, expert opinion and Delphi Method.
Quantitative methods of demand forecasting include mathematical tools and statistical data.
They are mostly impartial because it is numerical and not based on the opinion of a person.
Some quantitative methods are time series models and casual models.
Explanation:
Demand forecasting is the process in which historical sales data is used to develop an estimate of an expected forecast of customer demand.
There are two types of forecasting methods: qualitative and quantitative.
Qualitative techniques are the ones which apply knowledge of the business, market, product and customer to make a judgment call on the forecast. These techniques are primarily based on opinion, like the Delphi Method, Market Research, Panel consensus etc.
Quantitative methods come in two main types: time-series methods and explanatory methods. Time-series methods make forecasts based purely on historical patterns in the data.