Quick And Easy Way To Monitor Forecasts

QUICK AND EASY WAY TO MONITOR FORECASTS One of the important phase of the forecasting process is to monitor forecasts, that is, to see how actual numbers are coming out against forecasts. If actual numbers are not coming out as expected, forecasts have to be revised. The revised forecasts may call for a change in the plan. Forecasts, as we know, are based on a plan, that is, how much money will be spent on advertisement, what prices will be charged, how many new products will be introduced, and so on. Based on the revised forecasts, management may decide to change the plan. It may decide to increase the promotional budget, offer special discounts and/or put pressure on salespeople to achieve the forecasts. CUMULATIVE SALES RATIO The monitoring process calls for not only comparing actuals with the forecasts but also what will happen if the current situation continues. The cumulative sales ratio can help to make that determination. It can tell what would be the sales for the whole year based on one month or one quarter sales. Here is a step by step procedure for computing cumulative sales ratios and preparing forecasts. The sales data of Bristol-Myers Squibb are used to illustrate ...