4.3 Sales Forecasting (HL)

a) The benefits and limitations of sales forecasting AO3

Correlation

The relationship between two sets of numbers or variables, such as sales revenue at different times of the year.

Cyclical variations

The recurring fluctuations in sales revenues due to the trade cycle (or business cycle).

Extrapolation

A forecasting technique that identifies the trend from using past data and then extending this trend line to predict future sales.

Random variations

Irregular, erratic, or unexpected fluctuations in sales revenues, caused by unexpected and unpredictable factors.

Range

The difference between the highest and the lowest values in a data set.

Sales forecasting

A quantitative technique used to predict a firm’s level of sales revenue over a given time period.

Seasonal variations

Foreseeable periodic fluctuations in sales revenues over a known period of time, such as certain months or times of the year.

Time series analysis

 A statistical technique used to identify trends in historical data, such as the figures for a firm’s monthly sales revenues.