This PPT is based on the price determination and forecasting in procurement. It gives a basic idea about the different analytics like descriptive and predictive used for price determination. Moreover it gives information about the techniques, comparisons and technical analysis of price determination.

1. Price Determination and
Forecasting in Procurement

2. Price Determination
 With any purchase of raw materials some type of cost analysis is
required. A part of this analysis is verification of pricing.
 Thus the process of determining the cost of procuring the raw materials
is called price determination

3. Techniques of Price Determination
 Comparison of Competitive Bids
 Comparison of Prior Quotations
 Prices Set by Law or Regulation
 Rough Yardstick Comparisons

4. Comparison of Competitive Bids
 Best way for validating price.
 Comparing prices of three or more suppliers for the same product.
 Total cost of acquisition is the real cost that must be compared.
 Analysis on why a particular quotation is selected is required.

5. Prices Set by Law or Regulation
 Pronouncement is done by referring to pricing structure given
by law or regulation

6. Comparison of Prior Quotations
 Comparing recent quotations for the same product to
determine the viability of the current quotation.
 It is helpful when timing of the acquisition is critical

7. Rough Yardstick Comparisons
 Comparing like items based on measurable similarities such
as price per unit .

8. Technical Analysis
 It is used when it is difficult to find comparable items or
services.
 The analysis is on the basis of:
1. List of materials and their cost.
2. Number and kinds of labour hours required.
3. Any special tooling and facilities proposed.
4. A reasonable plan for use and disposal of scrap.
5. Any other cost, including profit, relevant to the cost of
providing the service or item.

9. Price Forecasting
 Price forecasting is predicting a commodity/product/service
price by evaluating various factors like its characteristics,
demand, seasonal trends, other commodities’ prices (i.e.
fuel), offers from numerous suppliers, etc
In general, price forecasting is done by the means of:
 Descriptive analytics
 Predictive analytics

10. Descriptive analytics
 Data Collection, Analysis, Interpretation and Presentation.
 Transforming Raw observation into knowledge one can
understand.
 It’s a summary of Historical Data.

11. Predictive analytics
 To forecast the probability of future events, outcomes, or
values in the context of price predictions.
 Requires statistical techniques.
 For example: Data Mining and Machine Learning

12. Factors Affecting Price Forecasting
 Demand
 Supply
 Weather
 Fuel Market

13. Price Forecasting Methods

14. THANK YOU
BY- PALAK JAIN
NIMISHA AGRAWAL
NINAD KULKARNI
PINAK DESHPANDE