‫In this video, we'll check out the different methods under statistical methods besides survey method.
‫Demand forecasting is also done a lot on the basis of statistical methods.
‫It is favored by a lot of companies as it is more logical and unbiased, as it depends on the historical
‫data and its extrapolation.
‫And that's why it is a reliable and useful for a company.
‫But there are two problems with this kind of demand forecasting.
‫The first one is that past may not give a correct picture of the present.
‫Now think about forecasting demand for Nokia and Kodak, and the picture will look too rosy because
‫both are the market leaders.
‫But the reality is harsh.
‫Both the companies are almost non existent today.
‫Secondly, it cannot be used for new product as there is no historical data.
‫That's why let us talk about the statistical methods.
‫Now, under a statistical method, demand can be forecast with the help of time series analysis or regression
‫analysis.
‫Now what is time series analysis?
‫Time theory is a statistical arrangement of data in a chronological order.
‫Its analysis helps the company to analyze the trend in the future.
‫The arrangement of data can be done in the form of a graphical representation, or it can be in the
‫form of a table.
‫Now, time series analysis helps to give us a trend long term tendency of the data, and it can also
‫show us the variations due to festivals, holidays, weather fashions and all.
‫Similarly, cyclical variations like boom, recession, depression and recovery can also help us in
‫analysis.
‫Sometimes unforeseen events like flood, war, epidemic, fire, etc. leads us to residual variations
‫which can also help in demand forecasting.
‫Under this method, we primarily use a graphical method semi average method, moving averages, method
‫and list a square method.
‫Now let us come to the second part that is regression analysis.
‫A regression analysis is one of the most popular methods of demand forecasting.
‫It analyzes the average relation between two or more variables mathematically, and a simple regression
‫analysis is done for two variable.
‫So only while under multiple regression it is done for multiple factors simultaneously.
‫This method is not only descriptive but also prescriptive and objective in nature.
‫It analyses time, series and cross section data for more accuracy.
‫But there are a few problems.
‫If you do not select the explanatory variables realistically, then it may be misleading.
‫Again, in the case of autocorrelation, the analysis results may be biased.
‫So let us recap.
‫In this video, we discussed the statistical method for demand forecasting under a statistical method.
‫We discussed that the demand can be forecast with the help of time series analysis or regression analysis.
‫Both these methods are widely used, but you need to calculate it carefully for the accuracy of your
‫demand forecast.
‫Thanks.