Issues in Sales Forecasting Essay Example
Issues, Problems and Techniques involved in forecasting Sales of New Products
James D. Jackson
There are countless issues, problems, and considerations in forecasting for new product. First, we must understand what a sales forecast is and what is designed to do. A sales forecast is an educated guess of future performance based on sales and expected market conditions. The value of the forecast is that we can predict and prepare for the future objectively. The objective is to review the past, be focused in the present and follow the trends of the past and present to predict the future.
Typically due to things that are out of our control, it is very difficult to forecast precisely. Mathematically, however, it is very possible to forecast sales with accuracy. Best case scenario, if the weather and other factors are predicted correctly, the forecast will have a better chance at being accurate. Obviously no one can forecast the damage a snow storm or tornado may cause and for how long. The following are are few of the major events that will affect the sales forecast: sales:
Seasonality, the economy, politics, fashion changes, average household income, demographic changes, the weather, and production requirements.
The major challenge, is who is actually prepared to do the forecast. Is it the newly hired college graduate? Or is it the gray-bearded old man that has been with the company for years? Typically, over time, it may be a combination of the two. Forecasting is not a science and it is usually inaccurate. Knowing that a forecast is very often inaccurate does not mean that nothing can be done to improve the forecast (Principles of Supply Chain Management, J. Wisner, K. Tan, G. K. Leong, 2005, p.142).
In this paper, I will address several forecast methods that were of particular interest to me, and the issues and problems associated with each one. There are a number of ways to introduce new products. Forecasting
James D. Jackson
There are countless issues, problems, and considerations in forecasting for new product. First, we must understand what a sales forecast is and what is designed to do. A sales forecast is an educated guess of future performance based on sales and expected market conditions. The value of the forecast is that we can predict and prepare for the future objectively. The objective is to review the past, be focused in the present and follow the trends of the past and present to predict the future.
Typically due to things that are out of our control, it is very difficult to forecast precisely. Mathematically, however, it is very possible to forecast sales with accuracy. Best case scenario, if the weather and other factors are predicted correctly, the forecast will have a better chance at being accurate. Obviously no one can forecast the damage a snow storm or tornado may cause and for how long. The following are are few of the major events that will affect the sales forecast: sales:
Seasonality, the economy, politics, fashion changes, average household income, demographic changes, the weather, and production requirements.
The major challenge, is who is actually prepared to do the forecast. Is it the newly hired college graduate? Or is it the gray-bearded old man that has been with the company for years? Typically, over time, it may be a combination of the two. Forecasting is not a science and it is usually inaccurate. Knowing that a forecast is very often inaccurate does not mean that nothing can be done to improve the forecast (Principles of Supply Chain Management, J. Wisner, K. Tan, G. K. Leong, 2005, p.142).
In this paper, I will address several forecast methods that were of particular interest to me, and the issues and problems associated with each one. There are a number of ways to introduce new products. Forecasting