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Describe in detail various methods of forecasting that aid in purchasing. Be sure to include scholarly resources to support your conclusions.

Describe in detail various methods of forecasting that aid in purchasing. Be sure to include scholarly resources to support your conclusions.

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Forecasting may be defined as the process of assessment of demand for a product during a given period of time in order to evolve an effective production plan. The various qualitative methods of forecasting are:

  1. Direct Interview Method
  2. Opinion survey method
  3. Delphi Method
  4. Market study and experiment method

Using these methods, we would be able to understand the general trend in terms of quality and not a particular quantity or number.

  1. Direct interview method: This involves the collection of data related to the demand for the product in the future from the prospective customers. This is also known as census or enumeration survey method. It is very easy and can be estimated easily by mere aggregation of the demands of the customers. Some disadvantages are that the buyer likes to exaggerate their requirements if they anticipate any kind of shortage of the product.
  2. Opinion survey method: In this method, the demand forecasting is being done by analyzing the opinion of the dealers, salesman and other sales experts. These people ate very close to the customers and hence they are supposed to know the pulse of the customers well regarding the demand. They can also give reliable information as they are aware of the changing market trends and the demand for competing products.
  3. Delphi method: This is a modified form of opinion survey method in which forecast is based on the consensus among the team of experts. They are asked to give an opinion regarding the forecast and each one is asked to comment regarding the demand. When a consensus reaches among them, the forecast is finalized.
  4. Market study and experiment method: This is to fin d out the reaction of different customers under different market conditions. The simulated markets are artificial markets in which the study is being conducted for some selected customers. The customers are provided with necessary cash and asked to spend it on competing products. This helps to establish a co-efficient of elasticity with which the demand can be forecasted easily. It also helps to know the buyer’s response change with respect to the price, packaging and the various promotional activities for that product.
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