4.3 Sales forecasting Flashcards
Sales forecasting
Predicting future sales levels and sales trends.
Quantitative sales forecasting methods:
- explorations
- market research
- time series analysis
Exploration (sales forecasting)
Identifies the trend by using past data and extending this trend to predict future sales.
Market research (sales forecasting)
Identifying and forecasting the buying habits of consumers .
Time series analysis (sales forecasting)
Attempts to predict sales levels by identifying the underlying trend from a sequence of actual sales figures recorded at regular intervals in the past.
Main elements of time series analysis:
- seasonal variations
- cyclical variations
- random variations
Seasonal variations (time series analysis)
Regular and repeated sales variations that occur in sales data within 12 or less months.
Cyclical variations (time series analysis)
Variations in sales that occur over periods of time more than a year.
Random variations (time series analysis)
May occur at any time and will cause unusual and unpredicted sales.
Statistical techniques in sales forecasting:
- mean
- median
- mode
- range
- standard deviation
Mean (statistical techniques in sales forecasting)
The most common measure of an average by calculating the sum of all numbers the in the data set divided by the number of items in that data set.
Median (statistical techniques in sales forecasting)
Average based on the middle value of data set which splits values form higher half from those in the lower half.
Mode (statistical techniques in sales forecasting)
Average as measured by the number or value that occurs most frequently in a data set.
Range (statistical techniques in sales forecasting)
Difference between the highest and lowest number in a data set.
Standard deviation (statistical techniques in sales forecasting)
Measures the difference of a variable from the mean value in a data set.
