4.3 - forecasting

sales forecasting

quantitative management technique to predict level of sales over a period of time

• to identify problems and opportunities in advance

sales forecasting techniques

• extrapolation

• market research

• time series analysis

extrapolation

identifies trend using past data and extending this trend to predict future sales 

market research

identifying and forecasting the buying habits of customers

time series analysis

predicting sales levels by identifying the underlying trend from actual sales figures

• seasonal variations

• random variations

• cyclical variations

advantages of sales forecasting

• improved working capital and cash flow

• improved stock control

• improved productive efficiency

• improved budgeting

limitations of sales forecasting

• limited information

• inaccuracy of predictions

• external influences