Quantative Sales Forecasting

Question 1

What is sales forecast

Answer 1

Prediction of sales made over a given time usually based on historical data

Question 2

What factors affect a sales forecast

Answer 2

Competitors actions
Interest rates
Exchange rates
Demographics
Consumer tastes
External shocks

Question 3

Why does businesses forecast sales

Answer 3

Lower risks
Prevents business’s failure or overspending
Plan raw materials
Attract sources of finance
Compare to competitors

Question 4

What is extrapolation

Answer 4

Using historical data to forecast the future

Question 5

What is a moving average

Answer 5

It takes a data series and smoothed the fluctuation in data to show an average .The aim is to take out the extremes of data from period to period

Question 6

What is rolling averages

Answer 6

The mean of sales in a period

Question 7

What are the factors affecting extrapolation

Answer 7

Changes in the market
External shocks
Product life cycle
Pace of technological innovation
Growth of global economy
Market growth/saturation

Question 8

What are the benefits of extrapolation

Answer 8

Simple method of forecasting
Not much data required
Quick and cheap

Question 9

What are disadvantages of extrapolation

Answer 9

Unreliable if there are significant fluctuations in historical data
Assumes past trend will continue in the future
Ignores qualitative factors