Demand Estimation and Forecasting for DALDA Banaspati in Pakistan: An Empirical Analysis from Multan District

Abstract

The main purpose of our study is to estimate the demand equation. By using this equation, we have to forecast the future demand. To forecast demand, we have collected actual data on demand of Dalda, price of Dalda, price of Hoor and total sales from Jan 2013 – Dec 2014. By using the Multiple Regressions, we have formulated the demand equation from actual data, and then we have forecasted the values by using exponential smoothing technique for all independent variables. Forecasted demand for the Jan of 2015 is 2072.2921, Quantity demanded will increase by 272.2921 (15 percent) for Jan 2015 as compared to the Jan of 2013. We find that price elasticity is -0.825279 it means that demand of Dalda lie in inelastic portion, it means that if price increase or decrease, there is less impact on the quantity demanded. Cross price elasticity of sultan is positive, its value is 0.4964 it shows that it is substitute commodity. Cross price elasticity of Hoor should be positive, but according to our result its value is –2.718552, which means that in this specific area people are using Hoor as a complementary product .Cross price elasticity of total sales is 1.7299.

Keywords: Multiple Regression Analysis, Demand Estimation and Forecasting, Elasticities, Price of Dalda, Total Sales.