Assignment on demand forecasting and pricing decision for a Supermarket. Please hlp how to tackle?

I don't know exactly what you're asking for, but I took a few semesters of economics and know the general idea of Supply and Demand.

Demand Forecasting is just what it sounds like: taking as estimate at what you believe the demand for an item will be in the future.

You know the Super Bowl is coming up, so you know the demand for soda, chips, and hot dogs will be skyrocketing over the next few weeks. Therefore, you stock up so that you have enough for the boost in demand (you don't want to be short, or you'll have some unhappy customers leaving empty-handed)

Now, look at the other end of the spectrum: everyone knows that a super popular New Year's Resolution is to "eat healthy" or "go on a diet" (everyone needs it after Halloween, Thanksgiving, and Christmas feasts and treats :). So for January and February, it's safe to assume that the demand for candy is going to drop, the demand for healthier options like produce, "whole grains", and "diet" labeled products is going to rise. So stores stock up on the healthy items.

Now, for price decision. Pricing decisions are all based on these demand forecasting. Now, you know the demand is going to rise, so there are 2 options: you can raise the price or you can lower the price. If you raise the price, you'll make more money on each item sold, but if you have competition (which everyone has these days with how many different stores and brand names there are), people are going to flock to whoever is cheaper. If you lower the price, you'll be making slightly less per item sold, but if the price is cheap enough, people will buy more! Therefore, if you price things JUST right, you can profit the most! If a bag of chips typically costs the retailer $2, and they sell it for $3 on an average day (I'm just making these numbers up, I don't know if these are the exact numbers), they're profiting $1 a bag. If they were to raise the prices for Super Bowl, people would probably notice and either buy less than they normally would or shop somewhere else. If they leave it the same, they'll sell a few more for than usual...but if they put it on sale for $2.50 a bag, they'll likely double or triple their sales, which will give them a higher profit in the end than just keeping the price at $3.

Then there are times when pricing decision is based on Supply. Produce is the best example for this. Different crops thrive during different times of the year. Watermelon and Strawberries are harvested in late spring/early summer. This is the time of year when you will have the MOST to sell (High Supply), therefore, you can sell it for a cheaper price. Come December, Supply is down. We can still get some Watermelons and Strawberries by importing them from other countries, but that increases the cost for the retailer. As a result of Low Supply, the cost goes up, thereby reducing the demand, thus increasing the price a bit more.

Then you have products where the demand is steady. Everybody will always need toilet paper! You will very rarely see the Demand, Supply and price of toilet paper fluctuate, because it's always the same. But oil and gas fluctuate constantly. The supply of oil varies, which effects the price. The amount that people travel varies during the year, causing the Demand to fluctuate. Now with Supply and Demand both constantly fluctuating, this is where the Demand to Supply rules apply the most: High demand with high supply means cheap, high demand with low supply means expensive, etc. But again, prediction is everything: they know people will be traveling more Thanksgiving weekend, Christmas weekend, 4th of July weekend, all of summer while school is out, etc. And they know that during summer, places like LA and other popular destinations will have higher demands than Podunk, Alabama.