# How to Forecast Sales in MikesBikes Introduction

The video below will demonstrate how to make a Sales Forecast for an existing product and a new product in MikesBikes Introduction, as well as the complementary production decisions for both.

#### We have provided you with the script for the video below to read through:

“This video will demonstrate how to make a Sales Forecast for an existing product and a new product, as well as the complementary production decisions for both.”

##### How do I conduct a Sales Forecast?

A Sales Forecast is a prediction of the number of units we believe we can sell in the year ahead.

This should be calculated using your predicted market share of the total market size for the year ahead.

Estimated Market Size Next Year x Percentage Market Share

##### What is our market share?

So what we need to do first is determine what our current market share percentage is. To do this, view the Market Summary Report. We can see for our RC_Rockhopper product, we have a market share of 55.5% of the total unit sales last year. We then need to find out what the total market size will be for the year ahead.

##### What is the estimated market size next year?

If we look at the Market Information report, we can see that the demand forecast for the year ahead is 42,000 units.

##### Calculate our Sales Forecast

Therefore, our sales forecast is calculated by our market share of the forecast total market size for the year ahead. In this example that would be 55.5% of 42,000 units. This is 23,310 units.

Now that if you believe that based on your decisions for the year ahead you can increase your market share from last year, you would use this adjusted market share instead of last year’s market share.

For this example we believe our market share will stay the same so our Sales Forecast will be 23,310 units. We enter this into Price screen under “Sales Forecast.”

Once you have entered your decision, click “Apply.”

Note the warning displayed here. This is telling us that our current Planned Production will not allow us to meet our Sales Forecast. This is when the difference is greater than 10%. So we know we need to go to the Production Planner screen to ensure we are producing enough products to meet our Sales Forecast.

##### Production Planner

We can see on this screen our Sales Forecast of 23,310 units in this screen. We can also see if we have any existing stock from last year, which in this example is zero. So our Planned Production to meet our Sales Forecast for the year ahead is equal to our Sales Forecast.

Enter the figure and click “Apply.”

If we did have any stock to carry over, we would subtract these units from the Planned Production figure.

##### New Product Sales Forecast

For a new product the challenge is we do not have an existing market share percentage to work with. Therefore, a Sales Forecast for a new product can only be based on the Forecast Total Market Size.

In this example we want to launch into the Road market.

The Market Information report tells us that forecast demand for the year ahead is 6,500 units. If we then look at the Market Summary Report, we see that there were no competitor products in this segment last year. However, given the opportunity an empty market segment creates, we should assume that at least one or two other competitors will also launch into this market. Therefore, it is reasonable for us to expect to secure a third of the Road market segment’s total size, which is approximately 2,160 units. Click “Apply.”

##### Production

We then need to our Production decision.

##### Conclusion

This concludes our brief demonstration on how to conduct a sales forecast and make complementary production decisions.

For more in-depth information, you should view the tutorial videos on our website.

If you have any questions, please feel free to email us at help@smartsims.com