Volume : 3, Issue : 5, May - 2014

AN APPROPRIATE MATHEMATICAL MODEL FOR A PRODUCT

Pratik H Trivedi

Abstract :

An important concern in all business and economic activities is to have some fair idea as to whether the future trends are going to be favorable or unfavorable. It helps the top management take appropriate policy decisions in advance. For example sales may be expected to rise substantially after, say, 5 years. This demand taking measures well in time to build adequate productive capacity so that the future profit potential is not lost to the rival producers. An anticipation of this kind involves long–term planning. On the other hand, product sales may be expected to go up shortly or in the near future. A prudent management would rise to the occasion to take advantage of such opportunities. It may call for making necessary adjustments in the existing production schedule and taking other steps, as the situation calls for. All this effort would be aimed at ensuring that sufficient stocks are kept ready with the given capacity so that the product is easily available when needed. A situation of this kind involves short–term planning. Irrespective of the length of future time period one is interested in being long or short, planners and policy makers at all levels need to know the future trends in business activity relating to several other variables and predict the likely cause–effect relationships among them. This is made possible through business forecasting, which consists of methods of acquiring knowledge about the future. Competition is an essential characteristic of modern business. Many a time, competition tends to be so intense that it poses a constant threat to the very stability of business activity. This factor alone makes fore–knowledge about future business trends extremely important as it enables a business firm to evolve appropriate strategies for holding on to its position or retaining market share already attained. In the absence of any serious impending threat of competition, neither would the need to know about the future be so imperative, nor would the concern for long–term and short–term planning be so impelling.