Solution:

Trend Projection Method:

• A firm that has been in existence for some time will have accumulated considerable data on sales during different periods. Such data when arranged chronologically yield time series.

• Time series relating to sales represent the past pattern of effective demand for a particular product.

• Such data can be used to project the trend of the time series. This can be done either through graph or through the least square method.

Regression Method:-

• Under this method relationship is established between the Quantity demanded and one or more independent variables such as income, price of the related goods, price of the commodity under consideration, advertisement cost, etc.

  • In regression, a Quantitative relationship is established between the demand which is a dependent variable, and the independent variable i.e., determinants of demand.

Graphical Method-

• Under this method trend is estimated with the help of a graph. Time & Quantity demanded are taken on both the axis and demand forecasting is made for the future.

  

• This method is completely subjective, as in this method graph is drawn and based on this graph demand forecasting is made Expansion of this graph is completely imaginary & subjective so it can be different for different persons.

• According to the graphical method, the past data will be plotted on a graph, and the identified trend/ the behavior will be extended further in the same pattern to ascertain the demand in the forecast period.

• The the following diagram shows the past data in bold lines and the forecasted data in dotted lines.