4.3 Sales forecasting (HL)

Question 1

Seasonal variations

Answer 1

Products that experience higher sales volumes at certain times of the year are said to be seasonal. One example is children’s toys, for which sales peak at Christmas. Other products may experience a peak in the summer months, such as sun cream, certain clothes and holidays

Question 2

Cyclical variations

Answer 2

Cyclical variations are affected by the economic cycle. Sales of normal goods, such as new cars and televisions, grow in recovery and boom periods and fall during recessions and slumps

Question 3

Random variations

Answer 3

These may occur at any time, and for any reason: A natural disaster, a major sporting event or political unrest can all affect sales of various products, in unpredictable ways.

Question 4

1. Calculate the annual variation

Answer 4

Variation = Sales – Three-part moving average (Trend)

Question 5

2. Calculate the cyclical variation

Answer 5

A cyclical variation is just an average of all of the annual variations for that cycle stage. We must add the variations together and divide by the number of years

Question 6

3. Adjust the sales forecast

Answer 6

add the cyclical variation to the sales forecast