Semester: Submitted to: Submitted on:

B.B.A 8th (B) Miss Mahwash Manzoor 26th feb,201

!hat is a "sa#es fore$ast%& !ho writes a sa#es fore$ast& 'ow does a sa#es fore$ast inf#uen$e the su((#) $hain& Sa#es fore$ast:
Prediction of the future sales of a particular product over a specific period of time based on past performance of the product, inflation rates, unemployment, consumer spending patterns, market trends, and interest rates. In the preparation of a comprehensive marketing plan, sales forecasts help the marketer develop a marketing budget, allocate marketing resources, and monitor the competition and the product environment. Sales forecasting is estimating what a company's future sales are likely to be based on sales records as well as market research. The information used in them must be well organized and may include information on the competition and statistics that affect the businesses' customer base. ompanies try to forecast sales in hopes of identifying patterns so that revenue and cash flow can be ma!imized.

"efore the forecasting process begins, marketing, sales, or other managers should determine how far ahead the estimate should be done. Short#term forecasting is a ma!imum of three months and is often effective for analysing budgets and markets. Intermediate forecasting is between a period of three months and two years and may be used for schedules, inventory and production. $ong#term forecasting is for a minimum of two years and is good for dealing with growth into new markets or new products. Sales forecasts should be conducted regularly and all results need to be measured so that future methods can be ad%usted if necessary. "asically, sales forecasting is analysing all parts of a business from total inventory to the strengths and weaknesses of salespeople. &anagers must think about changes in customer sales or other changes that could affect the estimated figures. They must be competitive when assessing the competition and how they can surpass others in the marketplace to better meet the needs of the target market

Sales forecast is written by the sales manager and the financial manager with some collaboration of the marketing manager of the company.

*ore$ast inf#uen$e on su((#) $hain:

In the modern supply chain, forecasting is necessary for companies that manufacture items for inventory and that are not made to order. &anufacturers will use material forecasting to ensure that they produce the level of material that satisfies their customers without producing an overcapacity situation where too much inventory is produced and remains on the shelf. '(ually, the forecast must not fall short and the manufacturer finds them without inventory to fulfill customer)s orders. The cost of failing to maintain an accurate forecast can be financially catastrophic. *orecasts are developed for a company)s finished goods, components and service parts. The forecast is used by the production team to develop production or purchase order triggers, (uantities and safety stock levels. The forecast is not static and should be reviewed by management on a regular basis. This is to ensure that information on future trends, the internal or e!ternal environment is incorporated into the forecast to give a more accurate calculation.

Statisti$a# *ore$astin+:
In supply chain management software, the forecast is a calculation that is fed data from real time transactions and is based on a set of variables that are configured for a number of statistical forecast situations. Planning professionals are re(uired to use the software to provide the best forecast situation possible and often this is left unchecked without any review for long periods. To best use the forecasting techni(ues in the supply chain software, planners should review their decisions with respect to the internal and e!ternal environment. They should ad%ust the calculation to provide a more accurate forecast based on the current information they have.

Statistical forecasts are best estimates of what will occur in the future based on the demand that has occurred in the past. +istorical demand data can be used to produce a forecast using simple linear regression. This gives e(ual weighting to the demand of the historical periods and pro%ects the demand into the future. +owever, forecasts today give greater emphasis on the more recent demand data than the older data. This is called smoothing and is produced by giving more weight to the recent data. '!ponential smoothing refers to ever#greater weighting given to the more recent historical periods. Therefore a period two months ago has a greater weighting than a period si! months ago. The weighting is called the ,lpha *actor and the higher the weighting, or ,lpha factor the fewer historical periods are used to create the forecast. *or e!ample, a high ,lpha factor gives high weighting to recent periods and demand from periods for a year or two years ago are weighted so lightly that they have no bearing on the overall forecast. , low ,lpha factor means historical data is more relevant to the forecast. +istorical periods generally contain demand data from a fi!ed month, i.e. -une or -uly. +owever, this introduces error into the calculation as some months have more days than other months and the number of workdays can vary. Some companies use daily demand to alleviate this error, although if the forecaster understands the error, monthly historical periods can be used along with a tracking indicator to identify when the forecast deviates significantly from the actual demand. The level at which the tracking signal flags the deviation is determined by the forecaster or software and vary between industries, companies and products. , small deviation may re(uire intervention when the product being forecasted is high#value, whereas a low#value item may not re(uire the forecast be scrutinized to such a high level.

,on-Statisti$a# *ore$astin+:
.on#statistical forecasting is found in supply chain management software where demand is forecasted based on (uantities determined by the production planners. This occurs when the planner enters in a sub%ective (uantity that they believe the demand will be without any reference to historical demand. The other non#statistical forecasting that occurs is when demand for an item is based on the results of materials re(uirements planning /&0P1 runs. This takes the demand for the finished good and e!plodes the bill of materials so that a demand is calculated for the component parts. The component demand can then be amended by the planner based on their assessment and knowledge of the current environment. The resulting forecast is based on current demand and will not incorporate any demand from previous periods. &any companies will use a combination of non#statistical and statistical forecasting across their product line. Statistical forecasting is based on comple! calculations and the future demand can be determined based on the demand from historical periods. The forecast gives the planner a guide to future demand, but no forecast is totally accurate and the planners e!perience and knowledge of the current and future environment is important in determining the future demand for a company)s products.

b)-./(#ain what 0(urif)in+0 and 0outsour$in+0 are. 'ow are the) simi#ar, and how are the) different& 'ow $an the) sa1e a $om(an) mone)&

23urif)in+2 is shifting non#selling activities to lower#cost alternatives 34utsour$in+5 is hiring another company to carry out a task or set of tasks

6ifferen$e in (urif)in+ and outsour$in+: 3urif)in+:

ompany can e!ert greater control over their efforts 4reater control over who is hired *ocus on only the company)s products, whereas an outsourced representative might be free to sell products from many other firms. It can be less costly than outsourcing another team to sell the products for the company.

4utsour$in+:
*irm)s selling costs can be shared with other manufacturers, reducing direct cost per sales call 'stablished relationships with customers from which the manufacturer can benefit. These can yield greater coverage of the market for the manufacturer

Simi#arities:
To a large e!tent, these two strategies, purifying and outsourcing, have been the reason of declining 'cost per sale'. 5hereas the 'average compensation per salesperson' has doubled.