sales forecasting

Question 1

what is sales forecasting?

Answer 1

predicting future demand by anticipating consumer behaviour in given circumstances.

Question 2

what 4 things can happen once sales forecasting has happened?

Answer 2

predict HRM needs, finance needs, estimate quantity and cost of purchases of raw materials and production levels, plan for expansion.

Question 3

why is sales forecasting useful?

Answer 3

helps position business to take advantage of opportunities.

Question 4

3 reasons why can sales forecasting be unreliable?

Answer 4

external factors such as:
economic factors - unemployment, inflation, interest and exchange rates.
consumer factors - trends change.
competition - can’t control or predict.

Question 5

what 2 types of data does sales forecasting use?

Answer 5

quantitative and qualitative.

Question 6

method of quantitative sales forecasting?

Answer 6

time series analysis by calculating 3 point moving averages.

Question 7

how to work out 3 point moving average?

Answer 7

take 3 adjacent months and divide by 3.

Question 8

what is extrapolation?

Answer 8

past business data or experience to forecast future sales eg taking past and extending on scatter graph.

Question 9

what are the 3 types of correlation?

Answer 9

positive, negative and non-existent.

Question 10

pros of time series analysis?

Answer 10

smooths out anomalies in past data so trends can be seen more easily.
able to plan production and able to meet demand.
should be more accurate than opinion.

Question 11

cons of time series analysis?

Answer 11

ignores external factors.
assumes past trends will continue.
can’t predict long term forecasts.
could be wrong.
very simplistic.

Question 12

3 types of qualitative forecasting techniques?

Answer 12

intuition, brain storming and delphi method.

Question 13

explain intuition.

Answer 13

following an instinct or gut feeling.

Question 14

pros of using intuition?

Answer 14

cheap and fast.
no need to gather data.
if experienced, very effective.

Question 15

cons of using intuition?

Answer 15

shouldn’t be only method.
could be completely wrong.
can lose money even with experience.

Question 16

what is brainstorming?

Answer 16

given a “problem statement” which is focus of discussion. all ideas welcomed and no judgements. around 6-12 varied ppl.

Question 17

pros of brainstorming?

Answer 17

cheap and relatively quick.
multiple views to compare.
mayo - ppl like teamwork.

Question 18

cons of brainstorming?

Answer 18

needs commitment.
could be wrong as not based on data.
depends on skill of staff.

Question 19

what is the delphi method?

Answer 19

group of experts respond to several rounds of open ended questionnaires and answers are shared next round, can respond to each other’s opinions until consensus reached.

Question 20

pros of delphi method?

Answer 20

anonymous so less bias.
have time to think through ideas.
records can be used when needed.
can be useful forcomplex problems.

Question 21

cons of delphi method?

Answer 21

time consuming.
assumes experts will reach agreement.
monetary payments may lead to bias.

Question 22

pros of using qualitative methods?

Answer 22

good when no data already.
can make predictions on things that historical data won’t take into account.
useful in fast changing market.

Question 23

cons of using qualitative methods?

Answer 23

bias.
no previous data as bias.
uncertain.