Sale Forecasting In Organization1

Sale Forecasting In Organization

Professor Guider: Dr.Masoud.Zade Attar

Presenter:Zahra Daneshpour

After market segmentation process and target market selection, appropriate sale forecasting leads to strategic an systematic

programming.

What is the sale forecasting?

• Is the process of a company predicting what its future sales will be.

• The program that your sales force provides is the source ofinformation that allows you to manage virtually all aspects of yourbusiness.

Forecasting is one of the IMPORTANT aspects of administration.

Why do we need to forecast sales?

Good Forecasting

Increase Knowledge

Improve

Manage products

informed decisions

Develop

Top ten reason:

Marketing

Price Stability

Continuous Improvement

Internal Controls

Financial Planning

Supply Chain Management

Inventory Controls

Higher OTIF Delivery

Demand Forecasting

Sales Planning

:Sales Planning

• Planning future activities,

• Providing each of them with a business plan,

• Identify the customers to meet their objectives.

Demand Forecasting:

• Best positioned to gather information about anticipated demand.

• Good estimate of the demand for the products you sell.

Higher OTIF Delivery:

• Achieve a higher rate of On Time In Full (or OTIF, delivery)

• Guarantees that sufficient product will be manufactured.

Inventory Controls:• Better prepared your company will be to manage its

inventory.

• Avoiding both overstock and stock-out situations.

Supply Chain Management:

• Predict demand and manage production more efficiently.

• Better control over your supply chain.(This affords you the opportunities to manage resources and take full advantage of just-it-time ordering)

Financial Planning:• Gives you the information you need to predict

revenue and profit.

• Also ability to explore possibilities to increase both revenue and net income.

Internal Controls:

• Better control of your internal operations.

• You can make decisions about hiring marketing and expansion.

Continuous Improvement:

Continuous Improvement

Revising the Process

Improve the Accuracy

Can Improve ALLAspects

Price Stability:

• The good levels of inventories that you maintain will prevent the need for panic sales to rid your business of excess merchandise.

Marketing:• Gives marketing an advanced look at future sales and

offers the opportunity to schedule promotions if it appears sales will be weak.

Types of Forecast by Time Horizon

• Up to 1 year, usually less than 3 months

• Job scheduling, worker assignments.

Short-range forecast

• 3 months to 3 years

• Sales and production planning, budgeting

Medium-range forecast

• 3+ years

• New product planning, facility location

Long-range forecast

Seven Steps In Forecasting

Determine the use of

the forecast

Select the items to

be forecast

Determine the time

horizon of the

forecast

Select the forecasting

model(s)

Gather the data

Make the forecast

Validate and

implement results

Importance of Sales Forecasting:

Sales forecasting

Production

Purchasing

Human Resources

Finance

Research and Development

Marketing

How to Forecast Sales:

Forecasting Methods and Formulas

Estimate market size

Identify market needs

1-Estimate market size:

Estimate market size

Defining the Market

Determining Approach

Selecting Sources

Data Structuring—Typology

Data Analysis

2-Identify market needs:

Identify market needs

First sample

Q=n*q*p

Second sample

chain ratio method

First sample:

The number of customer for specific products

The number of product purchased by a customer

averagely

Average price

Second sample:

• A method of calculating total market demand for a product in which a base number.

• The total population of a country, is multiplied by several percentages, such as the number in the population above and below certain ages…

Example:

:Forecasting Errors

• Possible reasons for errors in forecasting1. Flaws in data used in forecasting process,

2. Insufficient data,

3. Unpredictable economic and socio-political environment,

4. Non-realistic and accurate assumptions,

5. Technical and technological changes,

6. Shifts in economic structure,

7. Administrative errors.

One of The important Consequences of Wrong Predictions:

Overproduction

Low production