3.3.1 quantitive sales forecasting- moving averages

Question 1

time series analysis

Answer 1

predicting future data by analyzing pattern from past data

Question 2

moving average

Answer 2

identifies trends easily and more reliable by removing + smoothing fluctuations in data to make an average so decisions can be made

Question 3

three year moving average trend

Answer 3

year your working out + year before + year after / 3

Question 4

four year

Answer 4

year your working out + year before + 2 years after (or2ubove) / 4

Question 5

eight year

Answer 5

year your working outs 4 year moving average + year after 4 year moving average

Question 6

sales forecasting

Answer 6

estimating future revenue by predicting amount of goods/services a b will sell in a given period of time

Question 7

moving average trend MAT (trend)

Answer 7

8 year moving average / 8 (or which ever other number divided by how many added e.g. 3 year moving average / 3)

Question 8

cyclical variant CV

Answer 8

actual sales-MAT

Question 9

line of best fit

Answer 9

should have equal amount of points on each side.

Question 10

extrapolation

Answer 10

uses past trends to forecast future by extending line of trend.

Question 11

limitations of quan sales forecasting

Answer 11

• it makes assumptions- limitation cuz we are not certain that past trends will continue into the future- this is because external factors can play a role such as, consumer trends- occurring demand to change e.g. if theres a chane in tastes and fashion quan sales forecasting wont take this qual data into account, economic variables- exchange rates, interest rates, taxation, competitor actions. -therefore we cannot be certain trends will carry on- if we use this it may lead us to false conclusions and therefore wrong decisions being made, this is a strong limitation for bs in a competitive business environment, always dynamic. if market = volatile when a market or security experiences periods of unpredictable, and sometimes sharp, price movements. (EXTERNAL FACS= CCE economic variables, actions of comp, consumer trends.
  COUNTER- regular MR to keep on top of trends
• also quan data may lack detail as its hard to determine a cause and effect so we cannot be certain about decisions being made.
• just a forecast will never be 100% accurate

Question 12

pros of quan sales forecasting

Answer 12

+ good planning tool as predicting future data, helpful to make inofrmed decisons by identifying trends in sales to anticipate future sales. reduces risks and therefore saving costs

+ quick and cheap

+ allows managers to set targets if they can predict future

+ensures you don’t run out of stock and have enough employees working

+planning tool

+decissons

+ understand the no of sales therefore how many employees are needed

+ could help get loan good for the expansion

Question 13

DEPENDS ON

Answer 13

• quality of MS, if done poorly or by ppl not experienced may limit the value of this tool
• depends on who makes the forecast, if specialist will be more accurate predictions as can understand market, if person from within the b less accurate as they may be based and predict good figures which may not ACC happen. only as good as the person who made. ACCURACY
• cant say what is happening now will continue in the future
• external shocks
• depends on consumer trends and comp actions

Question 14

conclusion

Answer 14

if market is dynamic the b can use extrapolation for predicting just a few steps ahead as the future is more uncertain as if they do more it will be waste of their time and resources they could have used elsewhere such as…