MGT-530 DIS 3: Demand Forecasting

Demand forecasting is an essential practice for organizations. The approach enables managers to make sound and business-related decisions. Predictions can either be a long or short-term. The long-term aspect forecasts corporate trends for periods of over two years, while the short-term method predicts for shorter periods, such as one year and few months. The two types of projections also vary in terms of use. Long-term outlook facilitates operational decisions, while the short-term approach supports a strategic resolution at the top management. In both cases, qualitative and quantitative approaches are the most common techniques used in business prediction. Although these methods substantially benefit corporations, they are also subject to various limitations.

Qualitative forecasting is used for long-term business prediction. The approach is subjective and often utilizes the opinion and judgment of industrial experts (Chindia, 2016). Delphi method, market research, and historical life-cycle analogy are the most common approaches for qualitative forecasting (Chindia, 2016). One of the benefits associated with the above technique is its utilization in the absence of historical data. However, studies reveal that the method may be unreliable, especially during changes in product and market demand (Ezeliora, Umeh, Mbeledeogu, & Okoye, 2014). In such instances, an alternative methodology may be required.

On the other hand, the quantitative technique is used for short-term forecasts. Under this method calculates future demand as a function of past data (Chindia, 2016). For instance, future sales for a given product may be computed using available historical data. Last period demand and simple exponential smoothing are some of the methods used in quantitative forecasting (Chindia, 2016). However, the benefits of this technique are limited to ever-changing consumer behavior and market patterns, which may affect the legibility of historical data (Ezeliora et al., 2014). When such issues arise, a business can combine both forecasting methods.

Predicting techniques are essential in organizations despite their limitations. For instance, I can use a qualitative method to forecast the state of e-commerce sale. In the second quarter of 2018, the sector recorded $127.3 billion sales (Agrawal, 2018). In my opinion, the transactions will be higher in 2022. Such a prediction is based on an informed judgment of the steady upward trend in the industry. I prefer such a technique because historical data on the consistent growth rate of e-commerce sale is unavailable.



Agrawal, P. (2018). Five things your e-commerce business needs to thrive. Forbes. Retrieved from

Chindia, E.W. (2016). Forecasting techniques and accuracy of performance forecasting. International Journal of Management Excellence, 7(2), 813-820.

Ezeliora, C.D., Umeh, M.N., Mbeledeogu, N., & Okoye, U.P. (2014). Application of forecasting methods for the estimation of production demand. International Journal of Science, Engineering and Technology Research, 3(2), 184-202.

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