what are the limitations of Survey methods of demand forecasting?
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Limitations of Demand Forecasting
There are several limitations of sales forecasting which the production and sales managers should understand and realize. Such limitations are given below:
1. Changes in consumers’ needs, tastes, fashions, etc.
In case of a consumer product the change in the needs, tastes, fashion and style of the consumers will affect the sales of the organization. If the commodity is well received by consumers, it will become popular and its sales will go up. Otherwise, the company will fail to achieve its sales forecast targets. To avoid this difficulty, the management must revise its sales estimates from time to time, taking in view the customers’ needs and preferences.
2. Lack of past data
For few products, it is very difficult to estimate the correct production sales figures because there is no past sales history. In such cases, management has to rely on such guesswork only.
3. Anticipatory growth element
It is very difficult to maintain a steady rate of growth over an extended period of time. The probable rate of growth should be considered while preparing sales estimates.
4. Psychological factors
Forecasting the psychological factors of customers is difficult. They may change suddenly from one that of confidence to apprehensiveness about the future. For example, a rumour of an impending war, for instance, would create a great demand for consumable items.
this will help you
Limitations of Demand Forecasting
There are several limitations of sales forecasting which the production and sales managers should understand and realize. Such limitations are given below:
1. Changes in consumers’ needs, tastes, fashions, etc.
In case of a consumer product the change in the needs, tastes, fashion and style of the consumers will affect the sales of the organization. If the commodity is well received by consumers, it will become popular and its sales will go up. Otherwise, the company will fail to achieve its sales forecast targets. To avoid this difficulty, the management must revise its sales estimates from time to time, taking in view the customers’ needs and preferences.
2. Lack of past data
For few products, it is very difficult to estimate the correct production sales figures because there is no past sales history. In such cases, management has to rely on such guesswork only.
3. Anticipatory growth element
It is very difficult to maintain a steady rate of growth over an extended period of time. The probable rate of growth should be considered while preparing sales estimates.
4. Psychological factors
Forecasting the psychological factors of customers is difficult. They may change suddenly from one that of confidence to apprehensiveness about the future. For example, a rumour of an impending war, for instance, would create a great demand for consumable items.
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