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nil22
nil22
Student
Graduate School

What is statistical planning employed in sales forecasting?

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Posted by nil22 on Thursday August 27, 2009 at 7:15 AM and tagged with statistical forecasting.

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  1. krishna-agrawala
    krishna-agrawala Teacher
    Graduate School

    eNotes Editor

    I believe you want to know about statistical methods of sales forecasting.

    Sales forecasting, also called demand forecasting is job of estimating or forecasting what is likely to be demand for a product in a specified period in future. Sales can be forecast using several methods. In addition to statistical methods, these includes other methods such as qualitative judgement, order book, and explosion of bill of material.

    Statistical forecasting itself consists of many different types of techniques such as time series, causal (regression analysis), market research, and simulation. The time series used data of demand in the past to estimate the pattern of demand in terms of variables such as average demand, trend, and seasonal variability to forecast demand in future.

    Causal forecasting uses regression analysis to determine the relationship of demand of a product with some other known variable and uses that to forecast demand. For example it may be possible to determine relationship between weather and sale of ice-cream. Using this understanding sale of ice-cream may be forecast based on expected temperature.

    Market research is based on collecting sample data by direct observation or by some other method such as interviewing people, and then statistically extrapolating the future demand from such data.

    Simulation is used to forecast demand when the demand is dependent on many different interrelated variables and it is not possible to create an integrated model of demand forecasting that results in one single forecast. The simulation method consist of describing the relationships of demand with relevant influencing factors in term of statistical probabilities and based on that working out likely demand under different scenarios. The Insights obtained for these results of simulation studies are used of deciding on the most likely value for the expected demand.

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    Posted by krishna-agrawala on Thursday August 27, 2009 at 8:59 AM