sales forecasting

• what is sales forecasting?

  this is the science of predicting future demand by anticipating the likely behaviour of consumers in given circumstances
• quantitative forecasting methods 


  used when there is historical data available

  • time series analysis
  • use of market research

  when looking at past trends in data to forecast this is called extrapolation
• qualitative forecasting techniques


  when there is no historical data available this is used

  • the Delphi technique
  • brainstorming
  • intuition
  • expert opinion
• External factors that impact sales forecasting

  • the state of the economy
  • consumer changing tastes
  • competition
• Time series analysis

  uses evidence from past sales records to predict future sales patterns

  • seasonal
  • cycle
  • trend
  • random
• Correlation

  • measures the relationship between two variables
  • the two variables are plotted on scatter diagram
  • can be positive, negative or have no correlation
• 3 point moving average

  helps to identify the underlying trend

  extrapolation does this also after the 3PA is plotted on a graph
• Brainstorming

  • a way to generate new useful ideas and promoting creative thinking, usually between a group of people
  • all ideas are welcome and no one is wrong
  • requires creativity
• Intuition

  • when business leaders and managers lean on a 'gut feeling'
  • successful for a lot of good leaders as they have experience
• Expert opinion

  there are consultants that specialise in certain industries or economists whom have opinions on future demand which could be useful to give a business insight
• Delphi method


  + can be used in a variety of different situations and complex problems

  + structured way for people to make decision

  + no bias

  -long process to complete

  -assumes the experts will come to a consensus

  -monetary payments to the experts may lead to a bias in results