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Summary Sales forecasting
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Summary notes for sales forecasting.
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Sales forecastingSales forecasting allows a firm to predict future sales, human resources management need,
finance needs, estimate purchases etc.
Advantages:
Improves cashflow
Helps manage staffing needs
Helps ensure you don’t overstock and tie up cashflow
Disadvantages:
Time consuming
Based on past predictions so may not be accurate
Doesn’t take into account economic activity
Technological change can impact future forecasting
Quantitative methods of sales forecasting involve the use of numerical data collected in the
past which is then used to predict future sales to predict future sales.
Timer series analysis uses evidence form the past sales to predict future sales patterns.
Seasonal analysis – seasonal demand
Trend analysis – LT data collected
Cycle analysis – demand and economic activity
Random factor analysis
Moving averages can be used to extrapolate data – extrapolation involves taking the past
and extending it into the future.
Advantages:
Smoothening out data
Identify trends
Separates random variation
Helps with decision making
Organise resource needs
Disadvantages:
Doesn’t take into account economic activity
Doesn’t take into account inflation
Ignores the actions of competitors
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