IBDP Business 4.3

Sales forecasting

Quantitative and qualitative techniques of predicting future sales

Sales forecasting techniques

Moving averages, variations, time series analysis, simple linear regression, descriptive statistics, market research

Moving averages

Often using 3 parts, it uses the average value of sales of the last 3 time parts, to make an average and extrapolate it

Variations

difference between the actual past data and the trend/moving average while helping identify the highest fluctuation periods

Time series

A sequence of sales data recorded at regular intervals

Time series analysis

Identifying the fluctuations and patterns in past data for sales forecasting

Time series analysis common fluctuations 

Seasonal, random and based on the economic cycle

Sales forecasting advantages

Assists marketing planning, helps maintain liquidity, helps manage stocks and reduces risk

Sales forecasting disadvantages

Assumes that future is based on past, it is just a prediction, time consuming, costly and potential bias