GROUP 1

AADIL
CHACKO
MONISHA
SOUMYA
JILL
VARGHESE
• Forecasting is the process of making predictions of the
future based on past and present data and most commonly
by analysis of trends.
• Sales forecasting is the process of estimating future sales.
• Accurate sales forecasts enable companies to make
informed business decisions and predict short-term and
long-term performance.
• Companies can base their forecasts on past sales data,
industry-wide comparisons, and economic trends.
 FACTORS AFFECTING SALES
FORECASTING

• Fluctuations in business environment (seasonal

fluctuations)
• Future state of economy (price rise, entry of foreign
firms, changes in demand)
• Political conditions (change of govt., external trade
relation)
• Market characteristics ( taste and preferences,
buying power, competition)
• Situational factors (recession, wars)
APPROACHES TO FORECASTING
 METHODS

QUALITATIVE METHODS QUANTITATIVE METHOD

• JURY OF EXECUTIVES OPINIONS • MOVING AVERAGE METHOD

• DELPHI TECHNIQUES • EXPONENTIAL SMOOTHING
• SALES FORCE COMPOSITE • REGRESSION ANALYSIS
• SURVEY OF BUYERS INTENTIONS • TIME SERIES ANALYSIS
• LEADING INDICATORS METHOD • ECONOMETRIC MODELS
 JURY OF EXECUTIVE OPINION

• A method of forecasting using a

composite forecast prepared by a
number of individual experts. The
experts form their own opinions
initially from the data given, and revise
their opinions according to the
others 'opinions. Finally, the
individuals' final opinions are
combined.
DELPHI METHOD

• The Delphi method is a

forecasting method based on the results of
questionnaires sent to a panel of experts.
Several rounds of questionnaires are sent out,
and the anonymous responses are aggregated
and shared with the group after each round. The
experts are allowed to adjust their answers in
subsequent rounds.
 SALES FORCE COMPOSITE METHOD

• It is a forecasting method used to forecast the

sales by adding up individual sales agents
forecasts for sales in their respective sales
territories.
• It is a bottom-up approach which companies
use to forecast more accurately.
SURVEY OF BUYERS INTENTION

• an investigation designed to discover BUYERS'

future plans in respect of purchasing a particular
GOOD or SERVICE. Such a survey is undertaken
to enable a firm to produce more realistic
forecasts of the anticipated future demand for their
product.
 LEADING INDICATORS METHOD

• The method suggests identification of key

factors that are called indicators that
influence sales.
• The trend or time series of the leading
indicators are studied to see their impact on
sales.
 MOVING AVERAGE METHOD

• A moving average is a technique to get

Period Sales an overall idea of the trends in a data set; it
is an average of any subset of numbers.
The moving average is extremely useful
1 S1 for forecasting long-term trends. Sales for
period 4 will be
2 S2 • S4= S1+S2+S3 / 3
• S4 is a three yearly moving average
3 S3 • If policy of the company to three yearly
moving average every time, then
• S5 = S2+S3+S4 / 3
 EXPONENTIAL SMOOTHING

• Similar to average moving method but in this

method the recent past sales is given more • Year 2000
importance or weight. • Sales (lakh) 50
• The objective is to smooth out fluctuations in • Forecasted sales (lakh) 45
the time series for accurate estimation.
• Forecasted sales for 2001
• Next year’s sale = a(this years sales) + (1-a)
• =0.4*50+(1-0.4) = 47
(this years forecast)
• Where, a= smoothing constant or weight,
• (1-a)= weight for immediate preceding year
TIME SERIES

• SALES= T*C*S*I
REGRESSION ANALYSIS
 ECONOMETRIC MODEL

• Econometric models are statistical models used in econometrics.

• An econometric model specifies the statistical relationship that is
believed to hold between the various economic quantities pertaining to a
particular economic phenomenon under study.