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  4. Forecasting Sales in MikesBikes Introduction

Forecasting Sales in MikesBikes Introduction

In MikesBikes Introduction you will be required to formulate a Sales Forecast for your products, as well as a required production quantity:

A Sales Forecast is a prediction of the number of units you believe you can sell in the year ahead. Making accurate Sales Forecasts is crucial to ensure you produce enough bikes to meet customer demand, while not producing too much leaving you with excess stock on hand.

Video: How to Forecast Sales Accurately

Sales Forecast Worked Example

A Sales Forecast in MikesBikes is calculated using the following equation:

Sales Forecast = Forecast Market Demand Next Year x Expected Percentage of Market Share

You can find the figures required for the above calculation on the Sales Information report at the right of your product decision screen:

These figures are located on the report here:

So for the example above:

41,000 x 53.2% = 21,812 units.

Now set your Production Quantity

Your Production decision should be your Sales Forecast minus Opening Inventory (if any).

Production = Sales Forecast – Opening Inventory

Our example above is entered on the decision screen below:

You will see that the Sales Forecast figure matches the Units Available figure at the bottom, meaning we are producing enough bikes to meet expected demand (assuming you have sufficient Factory Capacity).

Note: You may want to consider producing 5-10% more than your Sales Forecast to allow a buffer of extra stock if demand is greater than forecast. However, keep in mind that if you have too much inventory you will incur high warehousing costs.

Video: How to Forecast Sales for a New Market Segment

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