UNCERTAINTY OF

DEMAND FORECASTING
BYDEEPAK DUTT PANDEY
032

UNCERTAINTY OF DEMAND
FORECASTING
Demand forecasts are subjects to error and
uncertainty which arise from 3 principal sources:1. Data about past and present market.
2. Methods of forecasting.
3. Environmental changes.

1. Data about past and present market

The analysis of past and present market, which
serves as the springboard for the projection
exercise, may be vitiated by the following
inadequacies data:

Lack of standardization.

Few observation.

Influence of abnormal factors.

2. Methods of forecasting

Inability to handle unquantifiable factors.

Unrealistic assumptions.

Excessive data requirement.

3. Environmental changes
The environment in which a business functions is
characterized by numerous uncertainties . The
important sources of uncertainty are mentioned
below: Technological change.
Shift in governmental policy.
Developments on the international scene.
Discovery of new sources of raw material.
Vagaries of monsoon.

Coping with uncertainties

Conduct analysis with database on uniform and

standard definitions.

Monitor the environment imaginatively to

identified important changes.

Consider likely alternative scenarios and there

impact on market and competition.

Thank You