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4 Main Elements
- The importance of sales forecasting
- Methods and techniques of sales forecasting
- Why sales forecasting is often unreliable
- How to minimize consequences of poor forecasting
The Importance of sales forecasting
Aspects that critically depend on sales forecasts
- Profitability
- Production planning
- Material buying
- Inventory levels
- Customer service
- Cash flow
- Capital and revenue investment
- Employment policy
Methods and techniques
- Qualitative - group discussions, sales force predictions -
main value is cross check.
- Time series - trends, etc - premise is past patterns will
continue.
- Model based - regression, market experiment - take past
as starting point then incorporate variables.
Which method to use?
Consensus that reliance on any one
method is unwise.
Why so unreliable? Mechanical difficulties and the human factor.
How to minimize consequences
- Recognize the pressures
- Range forecasting - pessimistic, realistic, optimistic
- Day to day measures
- Monthly updating of estimates
- Customers on regular contracts
- Maintaining reserve of finished goods
- Flexibility in labor utilization
- Materials call-off from suppliers
- Above all effective communication and co-ordination
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