Types of Demand Forecasting Methods

5/18/18 12:27 AM

Demand forecasting is commonly used to help predict what both future and current customers are wanting in the future. This not only tells a company what consumers are buying, but also the products that the company should manufacture.

Along with manufacturing, this also pertains to the setting of the price of the good and what markets would be best suited for the company. With demand forecasting, it allows for insight into what the consumer needs, which can be forecasted through a variety of means and methods. 

Demand-Planning-sm

Predictive Analytics

This process uses mathematical principles that predict consumer behavior, which is based off of current/historic data. It uses overall research on a company’s product and how consumers have interacted with it. It is analysis that is interpreted off of consumer trends and making assumptions based off of recent/past trends. A drawback of extrapolating known data is that it is current data, which gives a lack of insight into the future because of unforeseen problems that may occur. This is by far one of the simpler methods of demand forecasting.

Advanced planning and scheduling software (APS) systems may have simulation or predictive analytics capabilities. These robust demand planning and demand forecasting components can predict with a considerable certainty to allow schedules, production plans, inventory and staffing to all be secured and allocated for production.  

Conjoint Analysis

When selling a product, it is important to recognize the most important attributes that consumers are considering when buying a product. Consumers can not purchase a good that has everything they want, there is usually a competing good that has attributes that the other good does not. Trade-offs happen with all goods, that is why it is important to identify why consumers are picking a certain product and what they value the most. Conjoint analysis gathers the data of the most favorable attributes of an item, which will help a company find out exactly what consumers value. They do this by having consumers rank their preferences of features, which then is translated by an analyst into a report that shows what customers prefer.  

Client Intent Surveys

With a buyer’s intentions survey, it ask what the consumer is planning on purchasing in the future. These surveys are usually included before entering a company’s website or accessing certain content such as a video. The survey may include questions asking consumers on a scale of 0 to 10 whether or not they are contemplating purchasing a trampoline. If the consumers are answering with a high probability, then this can give the company the analysis it needs to possibly go forward on a product that the company is considering.

Delphi Method

The Delphi method is a way of surveying experts anonymously. These surveys are done in a number of rounds, with between each round a summary is being formed and then converted into another question. These summaries and questions are then provided to the experts, which can either sway their opinion or they can have it remain the same. This process is repeated for multiple rounds until there is an overall consensus among the experts, which is determined by non-significant modifications of their answers. The point of this method is to use the consensus gathered to help with the development of new products.

Related Demand Forecasting Video 

 APS Resources

Topics: Factory Scheduling, Advanced Planning and Scheduling, Material, capacity planning, production planning, finite capacity, project management, supply chain, Forecasting, opportunity, scheduling, JIT, Demand Forecasting

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