Session Overview

After understanding the supply chain, its components and how companies achieve
strategic fit with regards to their supply chain strategy, let’s now understand the
very first step of the planning cycle i.e. demand planning.

Before you start with this session, let's quickly have a look at the video on ‘The
importance of Demand Planning’ to get an idea of what we will be covering in this
session. 

Demand prediction or forecasting allows companies to plan their operations in

an efficient manner. Demand planning helps in improving customer
satisfaction by avoiding stock-outs, cutting costs and increasing profits. In this
session, you will gain an understanding of the concepts of demand planning and
forecasting. The following topics will be covered in this session: 

1. Demand and its Determinants

2. Demand Planning and Factors Affecting it

3. Demand Forecasting, its Characteristics and Horizons

4. Factors Impacting Demand Forecasting 

5. Qualitative and Quantitative Demand Forecasting Techniques

6. Demand Forecasting Indicators (optional)

7. Demand Forecasting in Real Life (through an example of an edible oil manufacturer)

Session Objectives:

1. Recognise the key factors and considerations involved in demand planning

2. Use long-term and short-term demand forecasting techniques based on different

situations

3. Understand key qualitative and quantitative techniques for demand forecasting

Sales and Demand

Now that you have an understanding of the planning aspect of supply chain
management, it is extremely important for you to understand the chronology of the
supply chain planning process.

The entire supply chain planning process (also known as sales and operations
planning process) can be broken down into smaller planning activities that are
carried out in a stepwise manner. The output of each planning activity is fed as an
input to the next planning activity. Each activity is carried out at a specific time
and for a specified period.

Let’s watch the next video as our SME Shyam explains the stepwise planning
approach in detail

In the video above, you learnt about the planning activities that are carried out as
part of the big, all-encompassing supply chain planning process. These planning
activities are carried out in the following order:

1. Data gathering

2. Demand planning

3. Supply planning

4. Pre-sales and operations planning (Pre-S&OP) meeting

5. Executive sales and operation planning meeting

To understand the sales and operations planning process, you will go through each
of these planning activities in detail.

Let’s start with the first planning activity that is carried out after data is gathered,
which is demand planning.

But before we deep dive into the concept of demand planning, let's watch the next
video to understand what demand is and how it is different from sales

In the video above, you learnt about the difference between sales and demand,
which can be summarised as follows:

Sales: When you buy a product or service, sales is generated for that product or
service. In simple terms, sales is the process by which people pay money to acquire
something they demand.

Demand: Demand is the number of goods that the customers are willing to buy at
several prices during a given time frame.

Based on the concepts of demand and sales, it is safe to assume that even if the
demand of a product or service is very high, it does not necessarily translate into
higher sales numbers.
There can be multiple reasons for such a scenario, the most prominent of which is
the unavailability or inaccessibility of the product or service.
  

For the sales and demand to be equal to each other, the organisation must
have the production capacity, technology and sales infrastructure to deliver
what people want. All of these elements fall under the purview of supply chain
management.

Now that you have understood what demand is and how it is different from sales,
the next step is to identify the elements that determine the demand for a product or
service. But first, let’s attempt an assessment question to reinforce your learning of
the topics covered in this segment

Sales and Demand

Categorise the following as demand and sales.

1. Hot Pan Restaurant receives an order for 10 pizzas; however, due to shortage,
it is unable to fulfill the order.
2. Hot Wok Restaurant receives an order for 10 rolls and fulfills the complete
order.

Demand - 1, Sales - 1

Demand - 2, Sales - 1

Demand - 2, Sales - 2

Demand - 1, Sales - 2

✓ Correct
Feedback:

Demand from the market does not depend on whether it can be fulfilled by an
organisation or not; however, sales is that portion of demand that is fulfilled by the
organisation.
 Determinants of Demand
Demand for a product or service depends on a number of factors that are external
to an organisation. Let’s hear from Shyam as he explains this in detail

In the video above, you learnt about the following elements that determine the
demand for a product or service, which are as follows:

1. Price of the given product or service: As the price of product or service increases,

the quantity demanded decreases due to the decrease in the satisfaction level of the

consumers.

2. Price of related goods or services: Every product or service has two types of

products and services related to them, which are as follows:

1. Substitute products or services: These are the products or services that can

be used in place of one another to satisfy a particular want or desire (tea and coffee). 

An increase in the price of the substitute product leads to an increase in the demand for the

given commodity and vice versa.

2. Complementary products or services: These are the products or services

that are used together to satisfy a particular want or desire (tea and sugar).

An increase in the price of complementary goods leads to a decrease in the demand for the

given commodity and vice versa.

3. Income of the consumer: The effect of change in income on demand depends on the

nature of the commodity under consideration.

1. If the given commodity is a normal good, then an increase in income leads to

an increase in the demand for it, while a decrease in income decreases the demand for the

commodity.
2. If the given commodity is an inferior good, then an increase in income

decreases the demand for it, while a decrease in income leads to an increase in the demand

for the commodity.

4. Tastes and preferences: If a commodity is in fashion or is preferred by consumers,

then the demand for such a commodity increases and vice versa.

5. Expectation of change in price in the future: If the price of a certain commodity is

expected to increase in the near future, then people will buy more of that commodity than

what they would normally buy.

Now that you have understood the concept of demand and learnt about its
determinants, in the next segment, you will learn about demand planning.

Demand Planning
Let’s watch the upcoming video as our SME Shyam explains the concepts of
demand forecasting and demand planning

As you learnt in the video above, demand forecasting simply means predicting the
future demand for a product or service. This prediction can be made for one
week, one month or even one year in the future. Demand forecasting forms the
basis of all supply chain planning.

On the other hand, demand planning encompasses much more than demand
forecasting. Demand forecasting triggers a set of other duties and
responsibilities that are all part of demand planning.

 
 In a nutshell, demand planning refers to the process of creating reliable forecasts,
so products or services can be produced and delivered more efficiently and to the
satisfaction of the customers.

But what are the factors that affect demand planning? In the next video, you will
learn about the factors that have an impact on the demand planning process for a
product or service

In the video above, you learnt about certain factors that can be used to predict the
future demand for a product or service (and hence are useful in the demand
planning process) which are as follows:

1. Past demand for the product or service

2. Lead time of product replenishment: This refers to the time it takes for a product to

become available for sales again after the previous stock-out. You can read more about

replenishment cycle here.

3. Planned advertisements and marketing efforts.

4. Planned price discounts: As you learnt earlier, the demand for a product or service is
inversely proportional to its price. Thus, when a discount is provided for a product or service,

its demand increases.

5. Competitors’ actions: The demand for your product or service largely depends on

how your competitors are responding to the changing market conditions.

6. State of the economy: If the economy of a country is doing good and is expected to

perform better in the future, the overall demand for products and services is likely to increase

in future.

Now that you have understood the concept of demand planning, in the next
segment, you will learn about demand forecasting.
But first, let’s attempt an assessment question to reinforce your understanding of
the topic covered in this segment

Identify the factors responsible for demand planning

Which of the following data is not helpful for predicting the future demand for the
next month at Flipkart?
Number of monthly orders for the past six months

Number of orders in the same month last year

Number of daily orders fulfilled from Flipkart warehouses 

✓ Correct
Feedback:

The number of orders fulfilled from Flipkart warehouses determines the supply-side
capacity of Flipkart and is not an indicator of the expected demand from customers.
Supply-side capacity only determines the number of orders that can be fulfilled by
Flipkart from its existing warehouses; however, it is not an indicator of the expected
demand from the customers. If the demand is higher, then Flipkart may need to build
additional capacity to meet the demand.

Information about a marketing intervention planned for the next month

Demand Forecasting
Now that you have developed an understanding of what demand planning is, let’s
watch the next video to understand what demand forecasting is, why it is required
and how to forecast demand for a product or service

As you learnt in the video above, demand forecasting is done for unconstrained
demand. 
An unconstrained demand is a demand that does not consider the industrial and
logistical constraints that might be plaguing an organisation or the entire industry.
  

You also understood the need to forecast demand. The reasons for forecasting
demand are as follows:

1. To satisfy the actual demand for a product or service that will arise in the future

2. To produce only the amount of finished goods required by the customers, neither

more nor less

3. To reduce the volume of stock

In order to successfully forecast demand, it is vital to analyse the historical

unconstrained demand for the product, and then incorporate the data on the
following factors to arrive at the final numbers:

1. Data from marketing and sales campaigns

2. Shortages (voluntary or involuntary)

3. Logistical failures

4. Competitor’s campaigns

5. Exceptional events

Demand forecasts have certain characteristics that are associated with them. Let’s
hear from Shyam as he explains these characteristics in detail

The following characteristics are common to any demand forecast:

1. Demand forecasting is always wrong.

2. Long-term demand forecasts are less accurate.

3. Aggregate demand forecasts are more accurate.

Let’s watch the next video and go through the example of a cab aggregator to
understand why even cab aggregators like Uber and Ola need to do demand
forecasting
So far, you have developed an understanding of the concepts of demand planning
and demand forecasting. You have also understood the need to forecast demand
and learnt how to construct a demand forecast. In the next segment, you will learn
about the factors to be considered while forecasting demand.

But first, let’s attempt a few assessment questions to reinforce your understanding
of the topic covered in this segment

Demand Forecasting
Flipkart forecasts its demand from multiple geographies and for multiple product
categories (mobiles, lifestyle, electronics, etc.) to make various operational decisions,
including the inventory placement decision, i.e., how to distribute its inventory
between various warehouses in such a way that the orders are delivered to the
customers in minimum possible time. Which of the following demand forecasts at
Flipkart is likely to be the most accurate?

Expected number of orders in April from Delhi for mobiles

Expected number of orders in April–June from Delhi for mobiles

Expected number of orders in April–June from Delhi, Haryana and

Punjab for mobiles

Expected number of orders in April–June from Delhi, Haryana and

Punjab for mobiles and mobile accessories

✓ Correct
Feedback:

Aggregate forecasts are more accurate than disaggregate forecasts because of lesser
chances of error, as the horizon or scope of the forecast is broadened. As the
forecast becomes more specific, the scope of the forecast reduces, leading to the
possibility of an increase in error. For example, it is easier to predict the total demand
from Delhi, whereas it is difficult to predict the demand from each block in Delhi and
more difficult to predict the demand from each house in Delhi.
Demand Forecasting
Errors in demand forecasting can lead to subpar fulfillment of orders, customer
dissatisfaction and loss of business for companies. In order to serve the customers
better, companies should be able to forecast the customer demand with exceptional
accuracy so that supply levers can be built and deployed accordingly.

From the following list of techniques used by Flipkart, which technique will lead to
the most accurate demand prediction?

Flash sale construct, e.g., an exclusive launch of a smartphone at a pre-

decided time

Big billion day sale, i.e., heavy discounts and offers during a limited
period of time 

Pre-book deals, i.e., giving the customers an option to book a product

before its launch  

✓ Correct
Feedback:

Correct answer! Since the interested customers have already booked the product
before its launch, Flipkart accurately knows the demand for the product and can
build supply to satisfy this demand.

Pricing promotions, i.e., giving discounts on selected products 

Planning Horizons in
Demand Forecasting
Demand forecasting is an extremely rigorous and important activity. It forms the
basis of all the supply chain planning and, therefore, requires a lot of resources and
focus from an organisation.
Because of these reasons, before an organisation attempts to start the demand
 forecasting activity for its products, it should find answers to some questions. Let's
hear more from Shyam as he explains this in detail

As you saw in this video above, before undertaking the forecasting activity, an
organisation should ask the following questions:

1. What is the horizon for the business decision? 

Forecasting can be done for one week, one month or even one year into the future. The

organisation should decide beforehand how ahead in the future it wants to forecast the

demand for its products.

2. What is the financial impact of this business issue? 

Forecasting is a capital-intensive activity. An organisation should identify in advance what

the financial impact of undertaking this activity will be.

3. What is the availability and cost of data required to generate a forecast? 

As mentioned in the previous segment, while constructing a forecast, you should not only

have information on unconstrained demand figures but also cross-functional data from

marketing and other verticals. Hence, the organisation should have the required data available

with it before undertaking the forecasting activity.

4. What is the frequency of a forecasting activity? Do you need to forecast demand

on a weekly, monthly or quarterly basis? This depends on a lot of factors such as the

current position of your product in the product life cycle, competitors’ actions, market

conditions, etc.

5. Should forecasting be done at an item level or at an aggregate level? This also

depends on a lot of external factors such as past sales performance of the product or the

product category.

Considering the decision of setting up the horizon for demand forecasting, the time
horizon for a demand forecast varies from long-term forecast (3-5 years) to short-
term forecast (1-2 months or even less). So, how does a company decide the time
horizon for the demand forecast? Let’s watch the next video to understand this
 As you learnt in the video above, a demand plan is defined in terms of objectives
over short-, medium- and long-term periods. 

The following time horizons are considered in demand forecasting:

1. Strategic horizon (long-term): 

Strategic horizon includes detailed annual and bi-annual forecasts. These forecasts are done

for the next six and twelve months. The result of the forecast related to strategic time horizon

is then fed as an input to the following long-term supply chain plans:

1. Product plans (Marketing plan, Research and Development plan)

2. Industrial master plan: This determines the volume and characteristics of

goods to be produced.

2. Tactical horizon (mid-term): 

Tactical horizon includes detailed monthly forecasts. These forecasts are done for the next

one month. The result of the forecast related to tactical time horizon is then fed as an input to

the following medium-term supply chain plans via the sales and operations planning process

(S&OP) (which will be discussed separately later in the next session):

1. Production plan: This determines the quantity of finished goods to be

produced.
2. Sourcing plan: This determines the quantity of raw materials to be sourced.

3. Sales plan: This determines the sales strategy for selling the finished goods.

4. Storage and distribution plan: This determines the storage and distribution

facility and capacity to be used.

3. Operational horizon (short-term): Operational horizon includes detailed weekly

and daily forecasts. These forecasts are done for the next day and week at an individual

stock-keeping-unit (SKU) level. The result of the forecast related to operational time horizon

is then fed as an input to the following short-term supply chain plans:

1. Manufacturing plan

2. Distribution plan
Now that you have learnt about the time horizons based on which demand
forecasts are planned, in the next segment, you will be introduced to the various
types of techniques used for demand forecasting.

But first, let’s attempt a few assessment questions to reinforce your understanding
of the topics covered in this segment

Planning Horizons
Supply chain teams at Flipkart are required to take a host of decisions in order to
ensure the smooth running of operations in warehouses at all times. These include
inventory procurement decisions, manpower hiring decisions and decisions to
employ new machinery in the warehouses. While some of these are short-term
decisions, other decisions usually require planning for a long-term horizon.

Which of the following decisions at Flipkart warehouses is a short-term

decision and does not require forecasting and planning for a long-term horizon?
Decision to set up a new warehouse facility 

Decision to add new permanent employees in existing warehouses 

Decision to deploy new equipment across all the existing facilities 

Decision to procure spare parts for the existing equipment

✓ Correct
Feedback:

Correct answer! The decision to procure spare parts for the existing equipment is
taken for a short-term horizon and is not a long-term decision. The decision to
deploy new equipment, however, is usually a long-term decision because of its
capital-intensive nature.

Planning Horizons
Flipkart has three types of warehouses: Type A, Type B and Type C. Type A
warehouses are the largest warehouses with millions of square feet and are located
closer to supplier locations. Type B warehouses are medium-sized warehouses
 located right outside the major cities. Type C warehouses are small warehouses
located in the high-demand clusters. Fast-moving inventory (which is high-demand
inventory) is transferred at regular intervals from Type A / B warehouses to Type C
warehouses so that it can be delivered to the customers in the shortest time.

The planning horizon for which of these warehouses is likely to be the shortest for
Flipkart?

Type A warehouses

Type B warehouses

Type C warehouses

✓ Correct
Feedback:

Since Type C warehouses have fast-moving inventory, their inventory replenishment

cycles are shorter, i.e., they have to quickly replenish their inventory. Therefore, their
planning horizon is shorter to make sure that they always have the inventory that is
in high demand at that point of time. 

All warehouses have the same planning horizon

Qualitative Forecasting
There are two approaches used for demand forecasting: qualitative and
quantitative. Generally, companies use a mix of both approaches to arrive at a
demand estimate. Let’s watch the next video to learn more about these techniques

In the video above, you got an overview of the methods that are commonly used
for qualitative and quantitative demand forecasting. These methods are as follows:

1. Methods of qualitative forecasting:

1. Market research

2. Panel or group consensus

3. Historical analogy
4. Delphi method

2. Methods of quantitative forecasting:

1. Time series analysis (also known as intrinsic analysis)

2. Extrinsic analysis (also known as causal analysis)

3. Simulation

Let’s watch the next video to learn more about qualitative demand forecasting in
detail

As you learnt in the video above, qualitative demand forecasting techniques are
primarily subjective and rely heavily on human judgement. These techniques are
effective only when little historical data is available and when experts need to rely
on market intelligence. These techniques are used to forecast demand in the long
term (future).

Some methods for qualitative forecasting are as follows:

1. Market research: Anyone who has participated in a taste test at a supermarket has

been a part of market research. Examples of this method include the introduction of a new

beverage by a company.
2. Panel consensus: In a panel consensus, a panel of experts discusses an issue to make

a decision. Examples of this method include a panel of experts developing an election

forecast.

3. Historical analogy: In the historical analogy technique, the product goes through a

cycle, and decisions are made based on the past experience of similar products. Example: The

demand for IoT will follow the same path as was followed by the demand for software. Thus

IoT demand can be predicted based on the demand graph which was created by  'software'.

4. Delphi method: In the Delphi method, a panel of experts answers a sequence of

questions where responses to one lead to the next question. This sequence of events continues
through a number of rounds. The difference between the Delphi method and the panel

consensus method is that the identity of experts is not revealed in the former.

The accuracy of these methods varies, depending on the time horizon for which
they are used, and can be explained using the table given below.

Delphi Market Panel Historical

Technique
Method Research Consensus Analogy

Accuracy for 0 to 3
Fair Excellent Fair Poor
months

Accuracy for 3 months to

Fair Good Poor Good
2 years

Accuracy for 2 years and

Fair Good Poor Good
above

In the next segment, you will go through some of the techniques used in
quantitative forecasting

Quantitative Forecasting
In the previous segment you have understood the techniques used for qualitative
forecasting. Now, let’s watch the next video to learn about quantitative forecasting
techniques
 As you learnt in the video above, quantitative forecasting techniques rely on the
statistical analysis of data to generate a future forecast. These techniques are
effective when historical data is readily available.
The two methods of quantitative forecasting are as follows:

1. Time series forecasting:

1. Time series forecasting is a method used for predicting activities through a

chronological order.

2.  This technique forecasts future developments by evaluating previous patterns.

3. This technique is best suited for product categories with low customer

uncertainties.

4. Time series forecasting can be done through the following ways:

 Simple moving average

 Simple exponential smoothing

 ARIMA model 

2. Causal forecasting: 

1. Causal forecasting is a forecasting strategy in which the predictive variable is

believed to have a cause-and-effect relationship with one or more independent variables.

2. In causal forecasting, demand forecast is assumed to be highly correlated to

the environmental factors.

3. Causal forecasting can be done through the following ways:

 Regression modelling

 Econometric modelling

 Leading indicator modelling

The accuracy of these methods varies, depending on the time horizon for which
they are used, and can be explained using the table given below.

 
  

Now, you have learnt about the various forecasting techniques. The next questions
that arise are:

 Which technique is predominantly used in the industry? Is it qualitative or

quantitative?

 How is forecasting done in a big manufacturing company?

In the next video, you will find the answers to these queries through the example of
an FMCG edible oil company.

As you learnt in the video above, most companies use a mix of qualitative and
quantitative approaches to arrive at a demand forecast.

If you want to know more about the forecasting techniques and understand how
they are performed in real-life scenarios, it is recommended to go through the
session on the Optional Resources for Demand Planning.
 

In the next segment, we will summarise your learnings from this session.
But first, let’s attempt a few assessment questions to reinforce your understanding
of the topics covered in this segment

Time Series Forecasting

Flipkart’s demand planning team is working on forecasting the demand for the next
year. The team has gathered the demand data for the past 15 months and is now
trying to decide the most suitable (accurate) method to forecast the demand for the
next year. Some of the analysts in the team have suggested using the Time series
method. Depending on the demand trend characteristics and category characteristics
at Flipkart, when will the Time series method be the most suitable to forecast
demand?

When the product category has low demand uncertainty

When the demand pattern does not change much from one year to the
next

When, historically, the demand history has been a good indicator of

future demand

All of the above

✓ Correct
Feedback:

In the Time series Forecasting method, the previous trend of demand is used to
predict future demand. Therefore, if the demand follows the same trend in the past
few years and has low uncertainty and the pattern does not change much from year
to year, then time series forecasting is the most suitable method.

Forecasting Methods
Consider a start-up in the field of technology by the name of ABC Innovations Limited. The
company has created Pet Specs, spectacles for pet animals, which is a one-of-a-kind product
that has never been heard of before. Since the production of Pet Specs is an extremely
complex process, ABC wants to forecast the demand for it beforehand. According to you,
which of the following forecasting methods is the most suitable for predicting the demand of
Pet Specs?

Time series forecasting

Delphi method

✓ Correct
Feedback:

Correct answer! Qualitative forecasting is effective when little or no historical data is

available and when experts must rely on market intelligence. Within qualitative forecasting,
the Delphi method uses a panel of experts to predict the demand. In the case of Pet Specs,
since there is no historical data available, you have to rely on the opinion of the experts.

Causal forecasting

Historical analogy

Answer the following questions to test your learnings from this session. Note that
these questions will not be graded

Determinants of Demand
Two of the top gaming consoles in the world are Sony’s PlayStation and Microsoft’s
Xbox. A fun fact regarding these consoles is that they are sold at a loss by their
respective companies, i.e., the total cost incurred in manufacturing and transporting
these consoles is higher than their selling price. The companies earn money from the
sales of games for these consoles by charging royalty fees from game-developing
companies. Thus, the price of these games plays an important role in the sales and
success of gaming consoles.

Suppose the price of the games that are sold on PlayStation increases by 20%.
Determine its effect on the sales of PlayStation.  

The sales of PlayStation will increase with an increase in the price of

games.

The sales of PlayStation will decrease with an increase in the price of

games.

✓ Correct
Feedback:

Gaming consoles and their respective games are complementary goods. Thus, an
increase in the price of one will lead to a reduction in the demand for the other.

Effect of increase in price on sales

Consider the scenario of PlayStation and Xbox given in the previous question.

Suppose the price of PlayStation increases by 15%. Determine its effect on the sales
of Xbox.

The sales of Xbox will increase.

✓ Correct
Feedback:

Xbox and PlayStation are substitute goods; thus, an increase in the price of one will
lead to an increase in the demand for the other, and vice versa.

The sales of Xbox will decrease. 

Effect of increase in income on demand

Consider the same scenario of PlayStation and Xbox again.

There are two versions of PlayStation 4 in the market. One is sold by the name of
PS4, and the other by the name of PS4 Pro. PS4 Pro is an improved version of PS4. 
If the income of consumers targeting to buy a new PlayStation increases by
20%, what will happen to the demand of PS4 and PS4 Pro?
The demand for both PS4 and PS4 Pro will increase.

The demand for both PS4 and PS4 Pro will decrease

The demand for PS4 will increase and that of PS4 Pro will decrease.

The demand for PS4 will decrease and that of PS4 Pro will increase.

✓ Correct
Feedback:
 Correct! In comparison with PS4 Pro, PS4 is an inferior good. The demand for inferior
goods decreases while the demand for normal goods increases when consumer
income rises.

Graded questions
The following questions will be graded
Types of forecasting methodologies
Consider a scenario of a retailer. The retailer has the following two lines of product:

1. The first line of product (product line 1) comprises regular grocery items. The
revenue from the first product line makes up 80% of the retailer’s overall revenue.
2. The second line of product (product line 2) consists of special items such as
branded mobile phones, laptops, cosmetic kits, television sets and bicycles. These
special products are not always available in the retail store. The retailer ties up with
international manufacturers of special items once in a week or two to bring these
special products to stores at a heavily discounted price. The retailer always tries to
surprise its customers by bringing in a different category of special products.

Now, there are two teams working to forecast the customer demands for the two
product lines. Team 1 works for product line 1, and team 2 works for product line 2.
You have learnt about the two types of forecasting methodologies, i.e., quantitative
and qualitative. Based on your learnings, answer the following question.

Which type of forecasting method is more suitable for the products comprising
product line 1?

Qualitative

Quantitative

✓ Correct
Feedback:

Quantitative forecasting is more suitable for the products comprising product line 1,
as they are the regular products, and the retailer must be having abundant sales data
available for these products. It is easier to predict the demand for regular grocery
items based on past data.
Types of forecasting methodologies
Consider the same scenario of a retailer given in the previous question.
Which type of forecasting method is more suitable for the products comprising
product line 2?
Qualitative

✓ Correct
Feedback:

Qualitative forecasting methodology is more suitable for the products comprising

product line 2. The retailer always tries to surprise its customers by bringing in a
different category of special products. In this case, the retailer will not have enough
historic data available for one type of special products, and hence, it is difficult to use
quantitative forecasting here.

Quantitative