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8
Demand Modeling
8.1 Introduction
The general consensus in the engineering design community is that the
main motivation for an engineering rm’s activities is to make money.
There is nothing necessarily unethical about this notion, though. As
Hermann and Schmidt (2006) argue, prot-making enterprises generate
employment, manufacture products, and serve the community in the pro-
cess. Arguably, the contribution to society is greater than the burden, since
we do buy their products, which enrich our lives. This decision to purchase
also allows the customers to decide the fate of a product, and eventually
the company. Of course, the inverse problem of how to make a product
that the customers will buy is central to the decision making in a prot-
making company. Indeed, there are engineering challenges and regulatory
hurdles in making working products; the nal sales determine protability
and are the driving factors that make a product successful. To that effect,
demand modeling, the study of the expected number of sales of a product,
is undertaken.
Understanding the effect of design decisions on eventual product demand
is becoming more and more relevant in today’s era of globalization where
competitive advantage, whether due to price or technology, does not last
long. The focus of this chapter is on understanding how one should think
about demand in the context of engineering design. To that end, we will try
to understand how to incorporate demand in the initial stages of product
design, and what techniques are out there that help predict the expected
demand with or without the presence of competition, which will give us
an idea of how demand can be integrated into the design decision-making
process directly so that the effect of engineering decisions on prot can be
readily observed.

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