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Sales forecasting
Sales forecasting is the process of predicting what a firm’s future sales will be. It helps reduce uncertainty and ensure better planning. Uses quantitive methods.
Time series analysis
A time series analysis is a quantitative sales forecasting method that predicts future sales levels from past sales data
Key aspects of a time series analysis
The trend - Can indicate the rise and fall of sales over a given period of time.
Seasonal fluctuations - these are changes in demand due to the varying seasons of the year.
Cyclical fluctuations - these are changes due to the business cycle in an economy. For example, a recession.
Random fluctuations - notable changes or fluctuations that stand out from a given trend. For example, demand for ice cream on a rare warm day in winter.
Moving average
A moving average is a sales forecasting method that identifies and emphasises the direction of a trend.
Extrapolation
A line of best fit done to provide a sales forecast
Variation
Variation is the difference between actual sales and the trend values.
