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    Question

    Your company earned sales of $10 million last year and is anticipating a growth rate this year of 12.5%. You calculate this year's sales may be $12.5 million. Which forecasting method did you use to arrive at this answer?

    A Trend projection Correct Answer Incorrect Answer
    B Market research Correct Answer Incorrect Answer
    C Sales force composite Correct Answer Incorrect Answer
    D Delphi method Correct Answer Incorrect Answer
    E Econometric Correct Answer Incorrect Answer

    Solution

    1. Trend projection Here data of past sales is used to project future sales. This is the simplest and most straightforward method of demand forecasting. 2. Market research This is based on data from customer surveys. Time and effort is required to prepare and send out surveys and tabulate data. 3. Sales force composite This method uses the experience of the sales team in a company. Feedback from the sales group is used to forecast customer demand. 4. Delphi method Demand forecasting experts from outside the firm are involved in this method. Several rounds of questionnaires are held which are to be responded anonymously until the group of forecasting experts comes to a consensus. 5. Econometric A mathematical formula is created to predict future customer demand. Here, statistical tools and economic theories are combined to estimate the economic variables and to forecast the intended variables.

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