DEMAND

FORECASTING

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Table of of Contents :

Demand Forecasting…………………………………………………….. Page 1

Brief profile of Yamaha…………………………………………………. Page 1

Demand table………………………………………………………………. Page 3

Least squares method…………………………………………………… Page 7

Biblography…………………………………………………………………… Page 11

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Demand Forecasting: Forecasting customer demand for products and services is a proactive process of determining what products are needed where, when, and in what quantities. Consequently, demand forecasting is a customer–focused activity

Demand forecasting is also the foundation of a company’s entire logistics process. It supports other planning activities such as capacity planning, inventory planning, and even overall business planning.

Following on from what is discussed, I would be forecasting the demand for Yamaha Bikes based on one of the techniques for demand forecasting.

Brief Profile of Yamaha India :

Yamaha made its initial foray into India in 1985. Subsequently, it entered into a 50:50 joint venture with the Escorts Group in 1996. However, in August 2001, Yamaha acquired its remaining stake becoming a 100% subsidiary of Yamaha Motor Co., Ltd, Japan (YMC). In 2008, YMC entered into an agreement with Mitsui & Co., Ltd. to become a joint investor in the motorcycle manufacturing company "India Yamaha Motor Private Limited (IYM)".

IYM operates from its state-of-the-art-manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana and produces motorcycles both for domestic and export markets. With a strong workforce of more than 2000 employees, IYM is highly customer-driven and has a countrywide network of over 400 dealers.

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Presently, its product portfolio includes MT01 (1670 cc), YZF-R1 (998 cc), the all new YZF-R15 (150 cc), FZ16, FZ-S, Fazer (153cc), Gladiator Type SS & RS (125 cc), Gladiator Graffiti (125cc), G5 (106 cc), Alba (106 cc) and Crux (106 cc).

year Demand( in lakhs)2005 1359862006 1527852007 1188482008 1163882009* 214536

2009* Estimated demand based on the sale of motorcycles till June 2009

The reason for the slump in Demand for Yamaha Motorcycles in India in the year 2007 and early 2008 is due to

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None of their 4 stroke models have been successful in creating impact in the market strongly

The 125 C.C Gladiator though a good bike had not caught the imagination of the consumers.

Dealerships which in some places could not match the standards set by the swanky dealerships of the market leaders Hero Honda, Bajaj Auto, TVS Motos and Honda Motorcycle and Scooters.

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REASONS FOR UPWARD TREND IN 2009 :

Launched what they are synonymous for – Power. Increase in sales due to launch of the macho stud FZ series of bikes and the technical gem R15,

Launch of Suave Yamaha dealerships complete with racing kits, helmets to create a racing atmosphere.

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Demand Forecasting for Yamha bikes using the least squares method :

What is least Squares method :

Least squares estimation is a powerful tool to estimate the coefficient of a linear function. It is based on the minimisation of squared deviations between the best fitting line and the original observations given. In this method(also regarded as the algebraic method), we fit the data on demand and time in the form of equations and then project the demand for the future period. These equations are termed as “normal equations” and the task of least squares method is to find out the values of the coefficients in these equations.

Now, looking at the data from 2005 to 2009, we can predict the demand from ’10 to ’14.

RAW DATA

year Demand( in lakhs)2005 1359862006 1527852007 118848

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2008 1163882009* 214536

YEAR DEMAND Deviations from 2005

X2 XY

2005 135986 -2 2 271972

2006 152785 -1 1 152785

2007 118848 0 0 0

2008 116388 1 1 116388

2009 214536 2 2 429072

N = 5 Y= 738543 0 10 XY = 970217

The equation for linear trend is given as Y = a + bx. In order to solve this trned equation, we meed to solve the following normal equations

Y = NA + BX

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XY = AX + BX2

Solving these equations, we get,

A = 147708

B = 97021

Hence, the equation for linear trend is 147708 + 97021X

Let us calculate the trend values based on the basis of this equation :

YEAR EQUATION EXPECTED DEMAND IN LAKHS

Year 2010 147708 + 97021(3) 438771

Year 2011 147708 + 97021 (4) 535792

Year 2012 147708 + 97021 (5) 632813

Year 2013 147708 + 97021 (6) 729834

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Year 2014 147708 + 97021 (7) 826855

Using the least squares method, we have forecasted the future demad for Yamaha motorcycles in India, however, this is subject to various factors like

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Competitors strategy like pricing, new models etc

Economic conditions

Demand for motorcycles as a whole

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