Show the long term goals - demand forecast, Managerial Economics

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Q. Show the Long Term Goals - Demand forecast?

Long Term Goals:  If the demand forecast period is more than a year, in that scenario it's termed as long term forecast. Following are the key objectives of such forecasts:

To settle on the production capacity: Long term decisions are entangled with capacity variations by discarding or adding capacity in the form of capital assets - manufacturing plants, new technology implementation etc. Size of the organisation must such that output matches with the sales requirements. Organisations which are very large or small in size may not be in the financial interest of the company. Inadequate capability can hasten declining delivery performance, unnecessary rise in work-in-process and disturb sales personnel and those in production unit. However, surplus capacity can be expensive and pointless. Incompetence to appropriately deal with capacity can be an obstacle to obtaining the best possible performance. By examining the demand pattern for the product and the forecasts for the future, company can prepare for a company's output of desired capacity.


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