Demand Sales Forecasting in India

Demand/Sales Forecasting in Indian Firms

Abhijeet Kamble (05329031)

Ajay Nalawade (05329007)

Ashutosh Deo (05329003)

Sagar Ranadive (05329006)

April 3, 2006

Abstract

Forecasting is a science of predicting the future by analyzing the

previous data. The science of forecasting helps firms to take strategic

decisions to achieve their goals. Therefore, there is a need for precision

in the demand forecasts.

This has led to development of various new tools and methods for forecasting in the last two decades. This report discusses the forecasting

methods used for prediciting demand/sales of Indian firms. We also

present a case study on two-wheeler Indian automotive industry.

1 Introduction

Forecasting implies predicting the future after studying and analysing the

past and present data. Forecasting is of special importance in industries,

where important strategic decisions need to be taken to optimize the effi-

ciency of the resources and hence maximize the profits.

2 Sales Forecasting

The forecasting of sales is one of the most important information tools for

every management. In a company lot of units use the sales forecast for example top management, finance, production, human resources, purchasing

and marketing units. Top management unit allocates resources among functional areas and to control operations inside and outside of the company by

using the sales forecast. The company’s finance unit uses the sales forecasting to decide on capital appropriation, to project cash flows, and to establish

operating budgets. Production uses it to decide how much the company has

to produce and in what time and to control inventories. Human resource

units use the sales forecasting (to plan personnel requirements and also as

an input in collective bargaining). Purchasing unit uses it to plan how much

1materials the company needs and in which part of the year/month/week or

even day.

Marketing units of firms find sales forecasting very useful (to plan marketing

and...