Sales Forecasting

Question 1

What is forecasting?

Answer 1

The art and science of estimating future sales or costs with accuracy

Question 2

What is a contingency plan?

Answer 2

Plans held in reserve in case things go wrong

Question 3

What are real incomes?

Answer 3

Changes in household incomes after allowing for changes in prices

Question 4

What is a sales forecast?

Answer 4

A method of predicting future sales using statistical methods

Question 5

Why do firms need sales forecast?

Answer 5

Because they are the starting point for all planning e.g financial, HR or marketing plans

Question 6

Purpose of sales forecast

Answer 6

• Used in cash flow forecasting in order to estimate in flows each month
• Used in HR planning to estimate how many staff to employ
• Used in production planning to estimate how much raw material to buy
• Usedz in HR and finance to estimate what targets to
  give to the sales team and what commission to pay
• Forms the basis of the businesses overall aims and objectives which are viewed by investors to judge the success of the company

Question 7

What is extrapolation?

Answer 7

Using past sales data to predict future sales data