An estimate is forming a tentative idea of the future. Demand estimation is an attempt to arrive at future demand. As the name implies demand estimation is an attempt to have a probable idea of the future demand situation. In all kinds of businesses businessmen try to estimate future demand based on their past experiences. in the case of products with seasonal demand it is possible to arrive at a near accurate idea of demand based on past experiences. For examples firms in the business of umbrella. school uniforms, bags etc know that the demand will past demand, future demand can be estimated fairly accurately. This kind of advanced statistical models. Here practical experince, intuition and practical knowledge of the market are crucial, Many traditional businesses succeed and prosper because of this practical knowledge and experence.
Estimation and forecasting are done in many areas. Weather forecast is a good example. It is possible that the actual situation may vary from the forecast and the estimate. Yet, estimation and forecasting is done to foresee a situation close to the actual. If the future can be anticipated and forward planning and decision making are done to meet the future situation. then will lead to success.
The modern world is dynamic. Business situations, tastes and preferences of the peoples, demand environment etc change, very fast. In such a fast changing environment business becomes highly risky, production happens in the present for sale in the future. If the future turns out to be very different from the present businesses will incur huge loss. Demand estimation and demand forecasting are done to avoid this risk. If demand estimation and forecasting turn out to be correct, that can lead to huge profits. This is the rationale of demand estimation and forecasting. There will be scope for expansion and modernization for most firms in the industry.
Estimation and forecasting are done in many areas. Weather forecast is a good example. It is possible that the actual situation may vary from the forecast and the estimate. Yet, estimation and forecasting is done to foresee a situation close to the actual. If the future can be anticipated and forward planning and decision making are done to meet the future situation. then will lead to success.
The modern world is dynamic. Business situations, tastes and preferences of the peoples, demand environment etc change, very fast. In such a fast changing environment business becomes highly risky, production happens in the present for sale in the future. If the future turns out to be very different from the present businesses will incur huge loss. Demand estimation and demand forecasting are done to avoid this risk. If demand estimation and forecasting turn out to be correct, that can lead to huge profits. This is the rationale of demand estimation and forecasting. There will be scope for expansion and modernization for most firms in the industry.
