How can a good method of forecasting of demand be ascertained?

Expert Answers
Ashley Kannan eNotes educator| Certified Educator

I think that there is much to be gained from determining a forecasting of demand.  Part of this involves being able to find ways to understand the needs and wants of the consumer.  This could involve exploring traditional ends of consumer research, such as forums, surveys, and communication through standard means. Yet, I think that the inclusion of technology as a method of forecasting demand might be something worthy of exploration. Especially valid with young consumers, engaging them through social networking sites (Facebook, Twitter) and means of communication (Twitter, Orkut) might enable producers to better understand where demand might lie in the present and the future.  Being able to think in a modern paradigm and in one that embraces new and different modes of "reading" the consumer could represent a good method of the forecasting of demand.

krishna-agrawala | Student

A good method of demand forecasting is easy to use and gives forecasts with low error. We can ascertain the ease of using a given forecasting method by examining the amount of time and efforts that need to be put in for collecting the data to be used for forecasting and for the calculations involved in the forecasting algorithm. Also the skill requirement for using a particular forecasting method is an important determinant of forecasting method.

We can estimate the degree of forecasting error for a given demand forecasting method by using using past demand data to calculated what forecasts of demand the given method would have given for several planning periods in the past, and comparing these calculated forecasts with the actual demands to give forecasting error. The pattern of forecasting errors over several planning period can then be analysed to estimate the the forecasting error likely to result from the given method in future.