Sales Forecasts are used for:
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New product decisions
Product scheduling
Financial planning
Inventory planning and procurement
Distribution
Human resource planning
Time Frame of Sales Forecasts
• Short-range forecasts
– Last fewer than three months
• Intermediate forecasts
– Last three months to two years
• Long-range forecasts
– Last more than two years
Factors which affect how far ahead a
business should predict sales
• Continual decisions in planning, scheduling, inventory
and staffing in production, procurement and logistics
activities are short range
• Budgetary planning, cost control, marketing new
products, sales force compensation plans, facility
planning, capacity planning and process selection and
distribution planning are intermediate
• Whether to enter new markets, develop new products
or services, expand or create new facilities, or arrange
long-term procurement contracts are long-range
Factors which affect how far ahead a
business should predict sales
• Continual decisions in planning, scheduling, inventory
and staffing in production, procurement and logistics
activities are short range
• Budgetary planning, cost control, marketing new
products, sales force compensation plans, facility
planning, capacity planning and process selection and
distribution planning are intermediate
• Whether to enter new markets, develop new products
or services, expand or create new facilities, or arrange
long-term procurement contracts are long-range
Qualitative and Quantitative
Qualitative
• How well
Quantitative
Qualitative vs. Quantitative
Forecasting Methods
Qualitative
• Relies on subjective
data that reports
opinions rather than
historical data
Quantitative
• Uses facts or
statistical
computations such as
trend extensions
based on past data,
computer
simulations, and
economic models.
Factors affecting Sales Forecasts
Internal
• Sales Fluctuations
– Who are our customers?
– Number of customers?
– Diversity of customers?
• New Products
– Very new?
– Not similar to other items or
services?
External
• Market Conditions
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New Technology
Industry Growth
Trends
Laws/Regulations