chapter three “customer accommodation” part four “forecasting” you will need to manually...
TRANSCRIPT
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Chapter Three“Customer Accommodation”
Part Four
“Forecasting”You will need to manually advance from
slide-to-slide on this presentation.
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To follow are explanations of certain quantitative forecasting techniques
used to predict future sales.
No audio on this slide.
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Quantitative Methods
• Continuity extrapolation: incremental dollar or percentage increase is carried forward to the next year.
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Quantitative Methods
• Continuity extrapolation: incremental dollar or percentage increase is carried forward to the next year.
Growth Maturity Decline
IntroductionProduct Life Cycle
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Quantitative Methods (continued)
• Time series analysisSales = T x C x S x IWhere:T = trends or long-run changesC = cyclical changesS = seasonal variationsI = irregular or unexpected factors.
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Gasoline demand
Time Series Analysis
Time--Johnson, Kurtz, Scheuing 1994 “Sales Management”
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Gasoline demand
Time Series Analysis
Time
Cyclical changes
Cyclical changes (economy)
Cyclical changes
Seasonal variation (summer, winter)
Irregular or unexpected factors (political crisis)
--Johnson, Kurtz, Scheuing 1994 “Sales Management”
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast 1 4200 -- --
2 4410 -- --
3 4305 --
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
2 4410 -- --
3 4322 4305 --
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
2 4410 -- --
3 4322 4305 --
4 4366 --
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
2 4410 -- --
3 4322 4305 --
4 4106 4366 --
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
2 4410 -- --
3 4322 4305 --
4 4106 4366 --
5 4214
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
2 4410 -- --
3 4322 4305 --
4 4106 4366 --
5 4214 4260
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -- --
2 4410 -- --
3 4322 4305 --
4 4106 4366 --
5 4214 4260
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Quantitative Methods (continued)
• Exponential smoothing:
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Alpha is any number between 0 and 1.
The higher the alpha, the more weight to recent sales.
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Quantitative Methods (continued)
• Moving average
Year Sales 2-year 4-year
forecast forecast
1 4200 -
2 4410 -- --
3 4322 4305 --
4 4106 4366 --
5 4214 4260…higher alpha means later data has more influence or weight
All data contribute to forecast, but….
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha
=.2 .5 .8
1 4200 -- -- --
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha
=.2 .5 .8
1 4200 -- -- --
2 4200 4200 4200
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha
=.2 .5 .8
1 4200 -- -- --
2 4410 4200 4200 4200
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha .2 .5 .8
1 4200 -- -- --2 4410 4200 4200 4200
(.2)(4410) + (.8)(4200) = 4242
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha.2 .5 .8
1 4200 -- -- --2 4410 4200 4200 4200
(.5)(4410) + (.5)(4200) = 4305
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha.2 .5 .8
1 4200 -- -- --2 4410 4200 4200 4200
(.8)(4410) + (.2)(4200) = 4368
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha
.2 .5 .8
1 4200 -- -- --
2 4410 4200 4200 4200
3 4322 4242 4305 4368
(.2)(4322) + (.8)(4242) = 4258
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(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next period
Year Sales Alpha Alpha Alpha
=.2 .5 .8
1 4200 -- -- --
2 4410 4200 4200 4200
3 4322 4242 4305 4368
4 4106 4258 4314 4331
5 4311 4228 4210 4151
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End of Program.