Sales and Distribution Management

Report on Sales Forecasting Analysis

Submitted by
Nyein Wai
18 XPGDM 9

We used four methods to forecast the sales: Simple Moving Average (SMA), Weighted Moving
Average (WMA), Exponential Smoothing (ES) and Regression Analysis(R). Each forecasting
method gives different forecast values. We need to choose the most appropriate methods for our
sales forecasting. So we measure forecast error of each forecasting methods by using four
evaluation techniques: Systematic Error (BIAS), Mean Absolute Deviation (MAD), Mean Square
Error (MSE) and Mean Absolute Percentage Error (MAPE). Here, we also got different error
values based on which technique we use. So, we just focus on MSE technique because of its
computational efficiency. Moreover, the problem with the MAD is that it varies according to how
big the number are. MAPE is not often used. In general, the lower the error measure (BIAS, MAD,
MSE, MAPE), the better the forecasting model. For sales forecasting, we chose Regression
Analysis method which gives the lowest error in MSE. In Regression Analysis, the higher the R2,
the better the forecasting model. R2 should be nearest to 1. We did two forecasts for monthly sales
and quarterly sales.

Monthly Sales
In Regression Analysis results, R2 is 0.103 and Adjusted R2 is 0.0624. As the values are much less
than 1, we can say the model is not enough to forecast the sales. The other supporting points are
significance F value and P-value. The significance F is 0.125 and P-value is also 0.125. Both
values are higher than 0.05. So we can conclude the model is not efficient for forecasting monthly
sales.

Quarterly Sales
In Regression Analysis results, R2 is 0.21 and Adjusted R2 is 0.0785. As the values are much less
than 1, we can say the model is not enough to forecast the sales. The other supporting points are
significance F value and P-value. The significance F is 0.253 and P-value is also 0.253. Both
values are higher than 0.05. So we can conclude the model is not efficient for forecasting quarterly
sales.