Demand Forecasting – NMIMS Assignment Solution for April 2024

Q2. Anika is working in “Footon ltd Company” that manufactures formal and informal shoes for both men and women. It is observed that for the last few years, the sales figures are fluctuating and there are no vivid reason for the same. Anika’s manager have asked her to prepare a short notes on the importance of forecasting .Also her manager wants to know if implementing sales force composite and Delphi method can be useful for their Organisation?

Importance of Forecasting in Footon Ltd Company:

Forecasting plays a crucial role in the success and sustainability of businesses, and Footon Ltd Company, being in the business of manufacturing formal and informal shoes, can significantly benefit from effective forecasting. Here are several reasons why forecasting is important for Footon Ltd:

  1. Optimal Inventory Management:

    • Forecasting helps in estimating the future demand for shoes. By accurately predicting demand, Footon Ltd can optimize its inventory levels, reducing the risk of overstocking or stockouts. This leads to cost savings, improved cash flow, and better overall inventory management.

  2. Production Planning and Resource Allocation:

    • With reliable forecasts, Footon Ltd can plan its production schedules more efficiently. This ensures that the right quantity of shoes is produced at the right time, minimizing production costs and resource wastage. Proper resource allocation based on forecasted demand enhances operational efficiency.

  3. Supply Chain Optimization:

    • Forecasting provides insights into the demand for raw materials and components, enabling Footon Ltd to collaborate effectively with suppliers. This contributes to a well-optimized supply chain, reducing lead times and improving the overall responsiveness to market demands.

  4. Financial Planning and Budgeting:

    • Accurate demand forecasts are instrumental in financial planning and budgeting. Footon Ltd can allocate resources more effectively, plan investments strategically, and ensure that the financial health of the company aligns with anticipated sales volumes.

  5. Marketing and Promotional Strategies:

    • Forecasting helps in planning marketing and promotional activities. Footon Ltd can align advertising campaigns and promotions with periods of expected high demand, maximizing the impact of marketing efforts and improving the return on investment.

  6. Customer Satisfaction:

    • Meeting customer demand is essential for customer satisfaction. Accurate forecasts enable Footon Ltd to ensure that the desired shoe styles and sizes are available when customers want them, leading to increased customer satisfaction and loyalty.

  7. Risk Management:

    • Forecasting helps in identifying potential risks and uncertainties in the market. By understanding future demand trends, Footon Ltd can proactively manage risks related to market fluctuations, changes in consumer preferences, and other external factors.

  8. Strategic Decision-Making:

    • Informed by reliable forecasts, Footon Ltd can make strategic decisions about product development, market expansion, and overall business strategy. This ensures that the company is well-positioned to capitalize on opportunities and navigate challenges in the dynamic footwear industry.

Implementation of Sales Force Composite and Delphi Method:

Implementing forecasting methods like Sales Force Composite and the Delphi method can be beneficial for Footon Ltd Company in gaining more accurate and insightful predictions of future sales.

  1. Sales Force Composite:

    • The Sales Force Composite method involves gathering input from the sales team to generate forecasts. Sales representatives, having direct interactions with customers, can provide valuable insights into market conditions and customer expectations.
    • Advantages:

      • Ground-level Insight: Sales representatives have firsthand knowledge of customer preferences, trends, and feedback.
      • Quick Response to Market Changes: The method allows for rapid adjustments to forecasts based on real-time information from the field.
      • Enhanced Sales Team Engagement: Involving the sales team in the forecasting process can foster a sense of ownership and commitment.

    • Disadvantages:

      • Biases: Salespeople may be influenced by personal biases or short-term fluctuations, leading to inaccuracies.
      • Limited Expertise: Sales representatives may lack the statistical or analytical expertise required for precise forecasting.
      • Potential for Manipulation: There may be a risk of intentional or unintentional manipulation of data by sales personnel.

  2. Delphi Method:

    • The Delphi method involves collecting anonymous opinions from a group of experts, with the aim of achieving a consensus through multiple rounds of feedback. This method is particularly useful when dealing with uncertainties and a lack of historical data.
    • Advantages:

      • Expert Insights: The Delphi method leverages the collective wisdom of experts in the field, providing a holistic view of potential scenarios.
      • Reduction of Individual Bias: Anonymity helps in reducing the impact of personal biases, allowing for more objective opinions.
      • Flexibility: The iterative nature of the Delphi process allows for the refinement of forecasts as more information becomes available.

    • Disadvantages:

      • Time-Consuming: The Delphi method can be time-consuming due to the iterative nature of collecting and analyzing expert opinions.
      • Resource Intensive: Involving experts and facilitating multiple rounds of feedback may require significant resources.
      • Lack of Diversity: The group of experts may have limited diversity, potentially resulting in a narrow range of perspectives.


In conclusion, forecasting is pivotal for Footon Ltd Company’s success, helping in efficient resource management, strategic planning, and overall business optimization. Implementing a combination of forecasting methods, such as Sales Force Composite and the Delphi method, can enhance the accuracy and reliability of demand forecasts.

The Sales Force Composite method leverages the insights of the sales team, providing real-world observations and customer interactions. While it comes with potential biases, proper training and validation processes can mitigate these issues.

On the other hand, the Delphi method taps into the collective expertise of industry professionals, fostering a consensus-driven approach. While time-consuming, the method’s ability to reduce individual biases and adapt to evolving circumstances can be valuable for Footon Ltd.

Ultimately, a balanced approach that considers the strengths and weaknesses of each method, along with regular validation and adjustments based on actual sales data, will contribute to more robust and reliable demand forecasts for Footon Ltd Company.

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