Simple Demand Forecasting exercises

Exercise 1 Trend Projection Method

A firm has the following sales data.

Question

Forecast sales for 2024.

Solution

Increase per year = 20 units

Expected sales in 2024
160 + 20 = 180 units

Answer

Forecasted demand for 2024 is 180 units.

Exercise 2 Moving Average Method

Past sales data

Question

Calculate demand for 2024 using 3 year moving average.

Solution
Moving average = (80 + 100 + 120) ÷ 3
= 300 ÷ 3
= 100 units

Answer

Forecasted demand is 100 units.

Exercise 3 Percentage Change Method

Current demand = 500 units
Expected growth rate = 10%

Question

Forecast next year demand.

Solution
Increase = 10% of 500
= 50 units

Forecasted demand
500 + 50 = 550 units

Answer

Demand forecast is 550 units.

Exercise 4 Income Method

Current income = 20,000
Expected income increase = 10%
Income elasticity of demand = 1.5
Current demand = 100 units

Solution

Percentage change in demand
= YED × Percentage change in income
= 1.5 × 10%
= 15%

Increase in demand
= 15% of 100
= 15 units

Answer

Forecasted demand is 115 units.

Exercise 5 Price Elasticity Method

Current price = 50
Expected price fall = 10%
Price elasticity of demand = 2
Current demand = 200 units

Solution

Percentage change in demand
= PED × Percentage change in price
= 2 × 10%
= 20%

Increase in demand
= 20% of 200
= 40 units

Answer

Forecasted demand is 240 units.

Exercise 6 Expert Opinion Method

A firm expects higher demand during festival season based on dealer feedback.

Question

Which method of demand forecasting is used?

Answer

Expert opinion method