Demand Forecasting

Since the company already prepares a breakfast cereal that is served cold, introducing a breakfast cereal that is served hot would require the application of an evolutionary approach since the new product is an improvement of an existing product. The principle used in such a case is that the demand for the hot breakfast cereal is an outgrowth and evolution of the current product and therefore the demand of the cold breakfast cereal should be considered in predicting the sales of the hot breakfast cereal. The company should then monitor the sales of the hot breakfast cereal while making necessary adjustments.

One quantitative technique that can be used to forecast demand is the use of graphical forecasting methods (Basallo-Triana et al., 2017).  The analyst uses visual information by plotting daily sales of the breakfast cereal, which is served while hot in a graphical form. Converting a spreadsheet into a graph conveying the information visually is relatively easy. The chart makes it easier to spot changes in sales. Furthermore, analysts can extrapolate previous data using the graph to predict future sales(Basallo-Triana et al., 2017).

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Conversely, the use of expert opinion is an example of a qualitative technique that can be used to forecast sales. The company can consider asking experts to give their opinion on the current trend and possible developments in the future that may impact negatively on the economy as a whole or the food industry alone. The use of a graphical method to predict future sales and the application of expert opinions complement each other. The experts have to use the data collected to make their predictions.   They would also extrapolate the data for the first few days to predict how the sales would be in the near future.

ReferencesBasallo-Triana, M. J., Rodríguez-Sarasty, J. A., & Benitez-Restrepo, H. D. (2017). Analogue-based demand forecasting of short life-cycle products: a regression approach and a comprehensive assessment. International Journal of Production Research, 55(8), 2336–2350

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