chapter 3 sales forecasting

Question 1

purpose of sales forecasting

Answer 1

• a prediction on achievable sales revenue based on historical data, analysis of market surveys which can then be used for planning production

however this depends on the validity of the predictions

Question 2

what is time series analysis

Answer 2

uses evidence from past sales records to predict future sales patterns there are different methods they can use to do this

Question 3

usefulness of time series analysis

Answer 3

• helps them plan ahead
• production planning
• identifying seasonal variations
• reduces risk of unexpected surprises that could affect performance

Question 4

disadvantages of times series analysis

Answer 4

• not easy to predict the future
• historical data is not always a good indication of what might happen in the future
• less useful for long term forecasts
• not always accurate

Question 5

what is the Delphi method

Answer 5

forecasting technique which based on researching the views on a panel of experts

begins with an initial questionnaire focusing on the problems and then is sent to a panel of experts to answer and then returned, response are summarised then the questionnaire if further developed bases on the answers to the first and then is sent of again
the members rate and priorities the ideas concluded in the second questionnaire, allows them to come to a consensus

Question 6

disadvantages of the Delphi method

Answer 6

• requires a long period of time to complete as its time consuming
• assumes that experts are willing to come to a consensus and allow their opinions to be altered by others
• monetary payments to the experts may lead to bias in the results

Question 7

what are external factors affecting quantitative and qualitative sales forecasting

Answer 7

• economic factors- such as unemployment levels, infaltion, interest rates, exhancge rates and economic growth. unemplyment rates affect customer spending which would have an impact on slaes forecasting
• customer factors- consumers tastes and fashions constantly change and businesses try to anticiapte these changes through market research, however these changes are highly unpredicatable
• competition factors- a business cant control the actions of their competitiors, their actions will effect present and future busienss performance