Question Type: Business Economics
This question tests your understanding of demand estimation techniques in business economics. The correct method for estimating the demand for a new product based on an existing product's growth is the substitute approach.
Step-by-Step Logic:
- Substitute Approach: This approach leverages the existing product's sales data and growth patterns to predict the potential demand for a new product that serves as a substitute or alternative. If the existing product has a strong growth trajectory, it suggests potential market demand for a substitute product. The characteristics and market position of the substitute product are compared to forecast the new product demand.
- Why other options are incorrect:
- Growth Curve Approach: While growth curves are used in business analysis, they don't directly relate the growth of one product to the demand for another, as the substitute approach does.
- Vicarious Approach: This term isn't a standard technique in demand forecasting.
- Opinion Polling Approach: This relies on direct consumer feedback, not on the inherent relationship between existing and new product demand.
Core Logic/Pattern: The core logic lies in identifying the relationship between a new product and an existing substitute product to estimate demand. The existing product's growth provides an indirect measure of the potential market size for the new product.
Therefore, the correct answer is the substitute approach.
Important Questions from Forecasting
Name the human resource demand (need) forecasting technique, which solicits estimates of personnel needs from a group of experts, usually managers. The HRP experts act as intermediaries, summarise the various responses and report the findings back to the experts. The experts are surveyed again after they receive this feedback. Summaries and surveys are repeated until the experts' opinions begin to agree. The agreement reached is the forecast of the personnel needs.
Select the correct option :
The sensitivity of forecast in simple moving average forecasting method, for the increase of the length of average period,
For a product, the forecast and the actual sales for December 2008 were 25 and 20 respectively. If the exponential smoothing constant (α) is taken as 0.2, the forecast sales for January 2009 would be.
For a product the forecast and actual sales for December 2002 were 25 and 20 respectively. If the exponential smoothing constant is taken as 0.2, then forecast sale for January 2003 would be
- The difference between the actual demand for any time period and the forecast for the same period is termed as _______.
