4.3 Flashcards
(14 cards)
What is sales forecasting?
a quantitative technique used by businesses to predict the levels of sales that they may expect in future years
What are the three types of sales forecasting?
casual models, time series analysis, qualitative techniques
What are casual models?
a quantitative representation to show the relationship between factors that affect sales, and the sales itself.
What is extrapolation in casual models?
identifying trends using past data and extending this information/trend to predict future data
What is time series analysis?
statistical technique used by businesses to identify past trends and forecast sale trends in the future
What are seasonal variations in time series analysis?
when products experience high sales volumes at certain times of the year
What are cyclical variations?
when products are affected by the economic cycle
What are random variations?
variations to sales data caused by unpredictable events
What is qualitative analysis?
Analysis that should be done before forecasting sales. Market research on broad trends in external environment, and identifying buying preferences and behaviors of consumers
What are the uses of sales forecasting?
Validity in past sales data
Effective future planning
Increase budgets to increase sales
Better ability to decide
What are the limitations of sales forecasting?
Not enough data
Changing markets
Flexibility
Use different methods to predict
What is simple linear regression analysis?
a mathematical method to sort out the possible factors that can have an impact on future sales
What are the benefits of using a scatter diagram?
easy to plot
good for visual learners
show non-linear patterns with ease
easy to interpret
maxamimum and minimum values are easily determined
What are the limitations of using a scatter diagram?
cannot give you exact extent of correlation
cannot take more than two variables
quantitative data ONLY
