QUANTITATIVE SALES FORECASTING

Calculating Time-Series Analysis

It is often important for businesses to forecast future sales levels. Accurate sales forecasts will help
businesses to make a number of key decisions, such as how much stock to hold, how many people to
employ, how much cash is needed and what marketing strategies should be used. A business might use
some quantitative sales forecasting methods to improve the accuracy of sales forecasts. One important
quantitative sales forecasting method involves using “time-series analysis” .

The four main components that that a business wants to identify in time-series analysis are:

 Trend
 Seasonal fluctuations
 Cyclical fluctuations
 Random fluctuations

Identifying the trend

An analysis of figures will tell business whether there is an upward, downward or constant
trend. Identifying the trend allows the business to predict what is likely to happen in future.
The first step is to “ smooth out “ the raw data.
It is possible to calculate a trend by using a moving average. The average can be taken for
any period the business wants , such as a year, a month or a quarter.

Predicting the lines of best fir from the trend