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Submitted by:
Suman Saurabh
Roll No -10
Dept – Marketing
Trimester – IIIrd
Sales Forecating for Navy TV
Introduction
Forecasting implies predicting the future after studying and analysing the past and present data.
Forecasting is of special importance in industries, where important strategic decisions need to be taken
to optimize the efficiency of the resources and hence maximize the profits.
Sales Forecasting
The forecasting of sales is one of the most important information tools for every management. In a
company lot of units use the sales forecast for example top management, finance, production, human
resources, purchasing and marketing units. Top management unit allocates resources among functional
areas and to control operations inside and outside of the company by using the sales forecast. The
company’s finance unit uses the sales forecasting to decide on capital appropriation, to project cash
flows, and to establish operating budgets. Production uses it to decide how much the company has to
produce and in what time and to control inventories. Human resource units use the sales forecasting (to
plan personnel requirements and also as an input in collective bargaining). Purchasing unit uses it to
plan how much materials the company needs and in which part of the year/month/week or even day.
Marketing units of firms find sales forecasting very useful (to plan marketing and sales programs and to
allocate resources among the various marketing activities). The meaning of sales forecasting grows as
firms start to coordinate their own business in a world wide scale. The business world knows two types
of sales forecasting methods and they are subjective methods and objective methods, all of them have
advantages and disadvantages. Usually decision makers use one or another forecasting method and
their decision will depend on technical knowledge, previous sales data, and for what exactly the sales
forecasting will be used.
2007 65.54
2008 71.95
2009 91.34
2010 125.69
The easiest assessment might use last year’s figures as the next year’s forecast, but if the company is
new or is a growing company, then this easy method cannot be used.
Y = 20.72x + 44.60
Using the trend line, the sales forecast is determined to be approx Rs. 129.62 cr
= 0.3x125.69 + 0.7x89.342
= Rs.100.246 cr.
= corrected trend
2008 71.96
2009 87.45
2010 114.56
Y = 20.55x + 52.82
According to moving average method, sales forecast for year 2011 is found to be Rs. 126.56 cr.
= (125.69)2/91.34
Figure 1
r = ∑dxdy/√(∑dx2 X ∑dy2)
= -1834.3/4428.98
= -0.41
Interpretation:
Time series analysis is used to predict the sales for the coming years on the basis of the past
years sales figures.
Time series takes into consideration the sales data of the previous years i.e. 2007-2010, and
sales forecast for 2011 was Rs.129.62 crores
According to moving average method, sales forecast for year 2011 is found to be Rs. 126.56 cr.
Ratio Analysis to determine the sales forecast can be done taking into consideration the square
of the Actual Year sales, divided by the previous year’s sales. Thus , the sales forecast made on
this basis comes to Rs.172.95 crores
When we consider the growth rates of the 2 firms, ONIDA and NAVY TV, we can see that there is
significant difference between the growth rates of the 2 firms. The growth rate of NAVY TV is
higher compared to ONIDA in all the 4 years.
In order to study the nature of correlation between the sales of the 2 firms, we consider the
sales of both the firms for the last 4 years. It is determined that there exists negative correlation
between the sales variables of the 2 firms