Quantitative sales forecasting 3.3.1

Question 1

What is sales forecasting?

Answer 1

An important business planning tool. It provides an estimation of future sales using past sales data and considering external factors.

Question 2

Moving averages

Answer 2

1. calculate the moving total
2. calculate centred average

Question 3

Interpreting scatter graphs

Answer 3

• Allows businesses to compare two variables to establish if there is any correlation between them.
• Correlation does not always indicate causation so businesses need to research to establish whether a relationship exists.
• Extrapolation can be used to make predictions by assuming what has happened in the past will continue in the future

Question 4

Limitations to quantitative sales forecasting

Answer 4

• seasonality - weather
• competition - new entrants
• publicity - positive or negative
• market changes - change in consumer income
• change to legislation - changes to law

Question 5

Improving the accuracy of sales forecasting

Answer 5

• conducting market research
• employing experts with market knowledge
• revising sales forecasts frequently
  forecasting for short-term