what is quantitive sales forecasting
statistical technique which uses
data to make predictions about the
possible sales level in the future
what can a firm do with quantitative sales forecasting
Organise production
Organise the staff needed for the
level of production (human
resources)
Organise the finances to
manufacture the products
Organise marketing to promote
the products being sold
Limitations of quantitative sales forecasting techniques
Past sales figures are no
guarantee of future sales
Businesses need to appreciate
the SWOT and PESTLE factors
that may affect future
predictions, for example;
Weather
Trends
Competitor activity
Terrorist activity
what is investment appraisal
valuating the potential profitability of an investment to determine if it’s a worthwhile use of a company’s resources
what are the three methods used to calculate investment appraisal
simple payback
ARR
NVP
Limitations of payback investment appraisal
very simple only looks at speed of payback not profitability
limitations of ARR
Does not take into account the effects of time on the value of money
limitations of NVP
Very complex, not used by small
businesses, also results dependent on rate of discount used,
the higher the rate the more likely it is that the project will
be rejected as unprofitable
what is critical path analysis
CPA is a management tool which
helps a business to identify how
long a project will take and what
the critical tasks in that project
are
uses of CPA
schedule a project e.g
Benefits to a business of using CPA
useful for fast moving goods
stakeholder engagement
waste minimisation
Limitations of CPA
All the data in the network diagram is based on estimates and can
quickly become inaccurate
Drawing up a diagram and making all the calculations is time
consuming it may be quicker to just get on with the project and tackle
events as they arise
