4.3 HL Only

Question 1

Sales Forecasting

Answer 1

a technique used to predict the level of sales revenue that a firm/company expects to earn over a certain period of time.

Question 2

AO3s

Answer 2

Benefits and limitations of sales forecasting
Price Elasticity of Demand

Question 3

Extrapolations

Answer 3

based on your current data/trend, you predict the sales over the next whole year

Question 4

How can Sales forecasting help

Answer 4

If sales are predicted to increase (or decrease) for the foreseeable future, the HR department can recruit (or not) more workers.

Cash Flow Forecasts (3.7) and Budgets (HL 3.9) will also rely on sales forecasting data. Profit forecasts will depend on the level of sales expected over a certain period.

Production schedules will be based on the expected level of sales. Stock (inventory) management (5.1 & 5.3) will depend on the forecasted level of sales.

Question 5

how are the researches done

Answer 5

sales forecasts based on primary research and secondary research too and state of economy

often presented in the form of Time Series Data. This data helps predict sales revenue by using the underlying trends from a series of actual sales data recorded at regular times in the past.

The Moving Averages technique is the simplest method of sales forecasting.

Question 6

Three elements of a
Time Series Analysis

Answer 6

Seasonal Variations: periodic changes in sales over a specific time period such as months or quarters of the year (holidays, seasonal items such as gloves)

Economic Variations: changes is sales linked to the economic cycles of booms and slumps. These usually last longer than a year. (recessions, economic booms, etc)

Random Variations: unpredictable changes in sales caused by unknown factors (COVID= face mask sales = UP! vs. tourism= DOWN!)

Question 7

Seasonal Variations & Economic Variations

Answer 7

Knowing the year to year trend can be helpful for businesses who are highly affected by these predictable, and unpredictable, changes.

For Economic variations, for example during a 5-year recession, you can track the trend to see how your business is doing (trending) during the recession

Question 8

Moving Averages

Answer 8

useful indicators in sales forecasting as they identify and empathize the trend

more accurate and complex method as it helps to smooth out any fluctuations that may occur in the data, as opposed to raw data of sales, which doesn’t show a trend, just sales total