Quantitative Sales Forecasting

Question 1

Define Sales Forecasting

Answer 1

Sales forecasting is the basis formed for most other parts of business planning.

Question 2

Define Extrapolation

Answer 2

Extrapolation is the use of historical trends in order to predict future values.

Question 3

Benefits of Extrapolation

Answer 3

1) Simple method
2) Not much data required
3) Quick and Cheap

Question 4

Drawbacks of Extrapolation

Answer 4

1) Assumes past trends continue
2) Unreliable- fluctuations may occur
3) Ignores qualitative factors

Question 5

Define Moving Average

Answer 5

A moving average takes the data series in order to smooth out fluctuations of data to show an average.

Question 6

What factors do you have to take into consideration when drawing a moving average?

Answer 6

1) Product Life Cycle
2) Pace of technological innovation
3) Growth of the global economy
4) Rise of middle classes in emerging economies.

Question 7

Define Correlation

Answer 7

Correlation looks at the strength of a relationship between two values.

Question 8

Define Independent Variable

Answer 8

Independent variable is the factor that causes the dependent variable to change.

Question 9

Define Dependent Variable

Answer 9

Dependent variable is the variable that is influenced by the independent variable.

Question 10

What 3 factors affect sales forecast?

Answer 10

1) consumer trends
2) economic variables
3) competition action