9609 · 8.1.3
Sales forecasting flashcards
Revision flashcards for Cambridge 9609 Sales forecasting (syllabus 8.1.3). Flip, recall, then mark a real past-paper question.
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Why forecast sales?
Plan production, inventory, cash, marketing budget (5.5, 4.2).
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Moving average?
Average of last n periods — smooths random fluctuations.
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Sales force composite?
Collect estimates from sales reps — ground-level insight.
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Delphi method?
Experts revise forecasts anonymously until consensus.
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Quantitative limitation?
Assumes past patterns continue — fails in disruption.
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Qualitative limitation?
Optimism bias from sales team; expensive/time-consuming.
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Link to capacity?
Over-forecast → excess stock; under-forecast → stock-outs (4.3.1).
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Link to finance?
Cash flow forecasts depend on sales assumptions (5.3).
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What is a 'moving average' in sales forecasting?
A technique used in time-series analysis that smooths out fluctuations in historical sales data to identify the underlying trend. It is calculated by finding the arithmetic mean of a number of consecutive data points.
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Define 'extrapolation' and state its main limitation.
Extrapolation is the process of using an identified trend line from past data to project future sales. Its main limitation is that it assumes past trends will continue into the future, which is often not the case.
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What is the Delphi method?
A qualitative forecasting technique that gathers opinions from a panel of anonymous experts over several rounds. A facilitator provides feedback between rounds to help the experts converge on a consensus forecast.
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Identify two functional departments that use sales forecasts and explain why.
1. Operations/Production: To determine production schedules, inventory levels, and capacity needs. 2. Finance: To create budgets, manage cash flow, and set financial targets. (Other valid answers: HR for staffing, Marketing for campaign planning).
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What are the four components of time-series data?
1. The Trend: The long-term direction of the data. 2. Seasonal Fluctuations: Regular variations within a 12-month period. 3. Cyclical Fluctuations: Variations linked to the economic cycle (longer than one year). 4. Random Fluctuations: Irregular, unpredictable variations.