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SALES FORECASTING

PT. Sosro, January 2010




INTRODUCTION
Module 1
Introduction
Find your partner
Introduce your partners to the
class
1. What is your name?
2. What is your place of
employment? How long have
you been with your companies?
What are the areas of your
responsibility?
3. What is your expectations of the
course? What is one question
that you hope to get answered
during the class?
4. Tell us one fun thing that you
like to do on weekend?

Administrative Tasks
Hours
Locations
Emergency Phone
Parking Lot
Smoking Policy
Attendance List
Name Tents
Training Manuals
Training Agenda Day 1
09:00 10:30 Module 1: Introduction to sales forecasting
10:30 10:45 Break
10:45 12:00 Module 2: Indicators Affecting Sales
Forecasting
12:00 1:15 Lunch
13:15 14:30 Module 3: Moving Average Forecasting
Techniques
14:30 14:45 Break
14:45 15:30 Module 4: Linear Regression Forecasting
Techniques
15:30 16:00 Day One Wrap Up and Preview Day Two
Training Agenda Day 2
09:00 10:30 Module 5: Multiple Regression Forecasting
Techniques
10:30 10:45 Break
10:45 12:00 Module 6: One Way Anova Forecasting
Techniques
12:00 13:15 Lunch
13:15 14:30 Module 6: Two Way Anova Forecasting
Techniques
14:30 14:45 Break
14:45 15:30 Module 7: Forecasting as a Strategic Business
Tools
15:30 16:00 Course Summary and Wrap Up
What is Forecasting?
4-7
Process of predicting a future event
Underlying basis of all business decisions
Production
Inventory
Personnel
Facilities
Types of Forecasts by Time Horizon
Up to 1 year; usually less than 3 months
Job scheduling, worker assignments
Short-range
forecast
3 months to 3 years
Sales & production planning, budgeting
Medium-
range forecast
3+ years
New product planning, facility location
Long-range
forecast
4-8
Short-term vs. Longer-term
Forecasting
Medium/long range forecasts
deal with more comprehensive
issues and support management
decisions regarding planning and
products, plants and processes.
Short-term forecasting usually
employs different
methodologies than longer-term
forecasting. Short-term forecasts
tend to be more accurate than
longer-term forecasts.
4-9
Influence of Product Life Cycle
Stages of
introduction and
growth require
longer forecasts
than maturity and
decline
Forecasts is useful
in projecting
Staffing levels,
Inventory levels
Sales and
factory capacity
as the product
passes through life
cycle stages
4-10
Strategy and Issues During a
Products Life
Introduction Growth Maturity Decline
Standardization
Less rapid product
changes - more minor
changes
Optimum capacity
Increasing stability of
process
Long production runs
Product improvement
and cost cutting
Little product
differentiation
Cost minimization
Over capacity in the
industry
Prune line to
eliminate items not
returning good
margin
Reduce capacity
Forecasting critical
Product and process
reliability
Competitive product
improvements and
options
Increase capacity
Shift toward product
focused
Enhance distribution

Product design and
development critical
Frequent product and
process design
changes
Short production runs
High production costs
Limited models
Attention to quality
Best period to
increase market
share
R&D product
engineering critical
Practical to change
price or quality
image
Strengthen niche
Cost control
critical
Poor time to change
image, price, or quality
Competitive costs
become critical
Defend market position
O
M

S
t
r
a
t
e
g
y
/
I
s
s
u
e
s

C
o
m
p
a
n
y

S
t
r
a
t
e
g
y
/
I
s
s
u
e
s

HDTV
CD-
ROM
Color copiers
Drive-thru
restaurants
Fax
machines
Station
wagons
Sales
3 1/2
Floppy
disks
Internet
INDICATORS AFFECTING SALES
FORECASTING
Module 2
Types of Forecasts
Economic
forecasts
Address
business
cycle, e.g.,
inflation rate,
money
supply etc.
Technological
forecasts
Predict
technological
change
Predict new
product sales
Demand
forecasts
Predict
existing
product sales
4-13
Seven Steps in Forecasting
Determine
the use of
the
forecast
Select the
items to be
forecast
Determine
the time
horizon of
the
forecast
Select the
forecasting
model(s)
Gather the
data
Make the
forecast
Validate
and
implement
results
4-14
4-15
Sales over 4 Years with Trend and
Seasonality
Year
1
Year
2
Year
3
Year
4
Seasonal peaks Trend component
Actual
demand line
Average demand
over four years
S
a
l
e
s

f
o
r

p
r
o
d
u
c
t

o
r

s
e
r
v
i
c
e

Random
variation
4-16
Actual Demand, Moving Average,
Weighted Moving Average
Actual sales
Moving average
Weighted moving average
4-17
Realities of Forecasting
Forecasts are seldom perfect
Most forecasting methods assume that
there is some underlying stability in the
system
Both product family and aggregated
product forecasts are more accurate than
individual product forecasts
Forecasting Approach
Qualitative
Method
Used when situation is
vague & little data exist
New products
New technology
Involves intuition,
experience
e.g., forecasting sales on
Internet
Quantitative
Method
Used when situation is stable &
historical data exist
Existing products
Current technology
Involves mathematical
techniques
e.g., forecasting sales of color
televisions
Overview of Qualitative Methods
Pool opinions of high-level executives,
sometimes augment by statistical models
Jury of executive
opinion
Estimates from individual salespersons are
reviewed for reasonableness, then aggregated
Sales force
composite
Panel of experts, queried iteratively
Delphi method
Ask the customer
Consumer
Market Survey
4-19
Jury of Executive Opinion
Involves small group of high-level managers
Group estimates demand by working together
Combines managerial experience with statistical
models
Relatively quick
Group-think
disadvantage

4-20
1995 Corel Corp.
Sales Force Composite
Each salesperson projects their sales
Combined at district & national levels
Sales reps know customers wants
Tends to be overly optimistic
4-21
Delphi Method
Iterative group process
3 types of people
Decision makers
Staff
Respondents
Reduces group-think
4-22
Consumer Market Survey
Ask customers about purchasing plans
What consumers say, and what they actually
do are often different
Sometimes difficult to answer

4-23
Overview of Quantitative
Approaches
Nave approach
Moving averages
Exponential smoothing
Trend projection

Linear regression

4-24
Time-series
Models
Associative
models
4-25
What is a Time Series?
Set of evenly spaced numerical data
Obtained by observing response variable at
regular time periods
Forecast based only on past values
Assumes that factors influencing past and
present will continue influence in future
Example
Year: 2005 2006 2007 2008 2009
Sales: 78.7 63.5 89.7 93.2 92.1

4-26
Trend
Seasonal
Cyclical
Random
Time Series Components
4-27
Persistent, overall upward or downward
pattern
Due to population, technology etc.
Several years duration
Trend Component
4-28
Regular pattern of up & down fluctuations
Due to weather, customs etc.
Occurs within 1 year
Seasonal Component
4-29
Repeating up & down movements
Due to interactions of factors influencing
economy
Usually 2-10 years duration
Cyclical Component
4-30
Erratic, unsystematic, residual fluctuations
Due to random variation or unforeseen
events
Union strike
Tornado
Short duration &
nonrepeating
Random Component
MOVING AVERAGE FORECASTING
TECHNIQUES
Module 3
4-32
Any observed value in a time series is the
product (or sum) of time series
components
Multiplicative model
Y
i
= T
i
S
i
C
i
R
i
(if quarterly or mo. data)
Additive model
Y
i
= T
i
+ S
i
+ C
i
+ R
i
(if quarterly or mo. data)
General Time Series Models
Naive Approach
Assumes demand in next period is the same as
demand in most recent period
e.g., If May sales were 48, then June sales will be 48
Sometimes cost effective & efficient
4-33
Nave Seasonal Model
Nave Seasonal Model
Formula (1) : Yt+1 = Y1
Y24+1=Y24 , Y25=650
E25=Y25 Y25=850-650=200
Formula (2) : Yt+1=Yt+(Yt-Yt-1)
Y24+1=Y24+(Y24-(Y24-1)
=650+(650-400) = 650+250 =
900
E25=Y25-Y25= 850-900=-50


Year Quarter Sales Forecast
2004 1 500
2 350
3 250 200
4 400 150
2005 5 450 550
6 350 500
7 200 250
8 300 50
2006 9 350 400
10 200 400
11 150 50
12 400 100
2007 13 550 650
14 350 700
15 250 150
16 550 150
2008 17 550 850
18 400 550
19 350 250
20 600 300
2009 21 750 850
22 500 900
23 400 250
24 650 300
2010 25 850 900
26 600 1050
27 450 350
28 700 300
4-36
MA is a series of arithmetic means
Used if little or no trend
Used often for smoothing
Provides overall impression of data over time
Equation
MA
n
n
=

Demand in Previous Periods
Moving Average Method
4-37
Youre manager that sells beverages. You
want to forecast sales (000) for 2011 using a
3-period moving average.
2006 4
2007 6
2008 5
2009 3
2010 7
Moving Average Example
4-38
Moving Average Solution
Time Response
Y
i

Moving
Total
(n=3)
Moving
Average
(n=3)
2006 4 NA NA
2007 6 NA NA
2008 5 NA NA
2009 3 4+6+5=15 15/3 = 5
2010 7
2011 NA

4-39
Moving Average Solution
Time Response
Y
i

Moving
Total
(n=3)
Moving
Average
(n=3)
2006 4 NA NA
2007 6 NA NA
2008 5 NA NA
2009 3 4+6+5=15 15/3 = 5
2010 7 6+5+3=14 14/3=4 2/3
2011 NA

4-40
Moving Average Solution
Time Response
Y
i

Moving
Total
(n=3)
Moving
Average
(n=3)
2006 4 NA NA
2007 6 NA NA
2008 5 NA NA
2009 3 4+6+5=15 15/3=5.0
2010 7 6+5+3=14 14/3=4.7
2011 NA 5+3+7=15 15/3=5.0

95 96 97 98 99 00
Year
Sales
2
4
6
8
Actual
Forecast
Moving Average Graph
4-42
Used when trend is present
Older data usually less important
Weights based on intuition
Often lay between 0 & 1, & sum to 1.0
Equation
WMA =
(Weight for period n) (Demand in period n)
Weights
Weighted Moving Average Method
Actual Demand, Moving Average,
Weighted Moving Average
Actual sales
Moving average
Weighted moving average
Moving Average Technique
150
200
250
300
350
400
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Average
Sales
Moving Average Technique
Year t Sales Y't et
2,004 1 275
2 291
3 307
4 281
2,005 5 295
6 268 290 (22)
7 252 288 (36)
8 279 281 (2)
2,006 9 264 275 (11)
10 288 272 16
11 302 270 32
12 287 277 10
2,007 13 290 284 6
14 311 286 25
15 277 296 (19)
16 245 293 (48)
2,008 17 282 282 -
18 277 281 (4)
19 298 278 20
20 303 276 27
2,009 21 310 281 29
22 299 294 5
23 285 297 (12)
24 250 299 (49)
2,010 25 260 289 (29)
26 245 281 (36)
27 271 268 3
28 282 262 20
29 302 262 40
30 285 272 13
Double Moving Average
640
660
680
700
720
740
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Sales 3 Weeks Moving Average Double Moving Average
Double Moving Average Forecast
Time Weekly 3 weeks Double Column1 Column2 Forecast (Y16) Column3
sales MA MA Value Value Y15+p = a+bp
t Yt Mt M"t a b (p=1) et
1 654
2 658
3 665 659
4 672 665
5 673 670 665 675 5
6 671 672 669 675 3 681 -10
7 693 679 674 684 5 678 15
8 694 686 679 693 7 690 4
9 701 696 687 705 9 700 1
10 703 699 694 704 5 714 -11
11 702 702 699 705 3 710 -8
12 710 705 702 708 3 708 2
13 712 708 705 711 3 711 1
14 711 711 708 714 3 714 -3
15 728 717 712 722 5 717 11
16 727
Disadvantages of
Moving Average Methods
Increasing n makes forecast less sensitive to
changes
Do not forecast trend well
Require much historical data

4-48
Form of weighted moving average
Weights decline exponentially
Most recent data weighted most
Requires smoothing constant (o)
Ranges from 0 to 1
Subjectively chosen
Involves little record keeping of past data
Exponential Smoothing Method
4-50
F
t
= oA
t - 1
+ o(1-o)A
t - 2
+ o(1- o)
2
A
t - 3

+ o(1- o)
3
A
t - 4
+ ... + o(1- o)
t-1
A
0

F
t
= Forecast value
A
t
= Actual value
o = Smoothing constant
F
t
= F
t-1
+ o(A
t-1
- F
t-1
)
Use for computing forecast
Exponential Smoothing Equations
Exponential Smoothing Example
Youre organizing a meeting. You want to
forecast attendance for 2011 using
exponential smoothing
(o = .10). The 2006 forecast was 175.
2006 180
2007 168
2008 159
2009 175
2010 190

4-51
1995 Corel Corp.
4-52
F
t
= F
t-1
+ o(A
t-1
- F
t-1
)

Time Actual
Forecast, F
t
(
o = .10)
2006 180 175.00 (Given)
2007 168
2008 159
2009 175
2010 190
2011 NA
175.00 +
Exponential Smoothing Solution
4-53
F
t
= F
t-1
+ o(A
t-1
- F
t-1
)

Time Actual
Forecast, F
t
( o = .10)
2006 180 175.00 (Given)
2007 168 175.00 + .10(180 - 175.00) = 175.50
2008 159
2009 175
2010 190
2011 NA
Exponential Smoothing Solution
F
t
= F
t-1
+ o(A
t-1
- F
t-1
)

Time Actual
Forecast, F
t
( o = .10)
Exponential Smoothing Solution
4-55
Year
Sales
140
150
160
170
180
190
06 07 08 09 10 11
Actual
Forecast
Exponential Smoothing Graph
Exponential Smoothing Techniques
Exponential Smoothing
Y4=0.6*S3 + 0.4*Y3
Dumping factor (1 ) =
0.4
= 0.6
= 0.4
Time Sales Forecast Error
1 500 #N/A #N/A
2 350 350 -
3 250 350 100
4 400 290 (110)
5 450 356 (94)
6 350 412 62
7 200 375 175
8 300 270 (30)
9 350 288 (62)
10 200 325 125
11 200 250 50
12 200 220 20
13 550 208 (342)
14 350 413 63
15 250 375 125
16 550 300 (250)
17 550 450 (100)
18 400 510 110
19 350 444 94
20 600 388 (212)
21 750 515 (235)
22 500 656 156
23 400 562 162
Multiplicative Seasonal Model
Find average historical demand for each season by
summing the demand for that season in each year, and
dividing by the number of years for which you have data.
Compute the average demand over all seasons by dividing
the total average annual demand by the number of seasons.
Compute a seasonal index by dividing that seasons historical
demand (from step 1) by the average demand over all
seasons.
Estimate next years total demand
Divide this estimate of total demand by the number of
seasons, then multiply it by the seasonal index for that
season. This provides the seasonal forecast.

SIMPLE LINEAR REGRESSION
MODEL
Module 4
Shows linear relationship between dependent
& explanatory variables
Example: Sales & advertising (not time)
Y X
i i
=
+ a b
Dependent
(response) variable
Independent
(explanatory)
variable

Slope Y-intercept
^
Linear Regression Model
Linear Regression Techniques
Summary Output
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.863488967
R Square 0.745613197
Adjusted R Square 0.713814846
Standard Error 2.725453111
Observations 10
ANOVA
df SS MS F Significance F
Regression 1 174.1752427 174.1752 23.44817 0.001284315
Residual 8 59.42475728 7.428095
Total 9 233.6
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 32.13592233 4.408587726 7.289392 8.48E-05 21.96970081 42.30214385 21.96970081 42.30214385
Price (x) -14.53883495 3.002445334 -4.84233 0.001284 -21.4624863 -7.6151836 -21.4624863 -7.6151836
Yt = 32.13 14.53 (Xt)
Simple Linear Regression
Simple Linear Regression
Week Price (x) Sales (Y) % Status Forecasting %2 Status2
1 1.3 10 13
2 2 6 -40% 3 -77%
3 1.7 5 -17% 7 142%
4 1.5 12 140% 10 39%
5 1.6 10 -17% 9 -14%
6 1.2 15 50% 15 65%
7 1.6 5 -67% 9 -40%
8 1.4 12 140% 12 33%
9 1 17 42% 18 49%
10 1.1 20 18% 16 -8%
14.4 112 112
4-66
Slope (b)
Estimated Y changes by b for each 1 unit
increase in X
If b = 2, then sales (Y) is expected to increase by 2
for each 1 unit increase in advertising (X)
Y-intercept (a)
Average value of Y when X = 0
If a = 4, then average sales (Y) is expected to be 4
when advertising (X) is 0
Interpretation of Coefficients
4-67
Variation of actual Y from predicted Y

Measured by standard error of estimate
Sample standard deviation of errors

Denoted S
Y,X

Affects several factors
Parameter significance
Prediction accuracy
Random Error Variation
4-68
Least Squares Assumptions
Relationship is assumed to be linear. Plot
the data first - if curve appears to be
present, use curvilinear analysis.
Relationship is assumed to hold only within
or slightly outside data range. Do not
attempt to predict time periods far beyond
the range of the data base.
Deviations around least squares line are
assumed to be random.
4-69
Text uses
symbol Y
c
Standard Error of the Estimate
( )
2

=
2

1 = 1 = 1 =
2
1 =
2
n
y x b y a y

n
y y
S
n
i
n
i
i i i
n
i
i
n
i
i i
x , y
4-70
Answers: how strong is the linear relationship
between the variables?
Coefficient of correlation Sample correlation
coefficient denoted r
Values range from -1 to +1
Measures degree of association
Used mainly for understanding
Correlation
MULTIPLE REGRESSION MODEL
Module 5
Multiple Regression Analysis
Y = Konstanta + B1X1 + B2X2+ BnXn
Case Study
Sosro produce 3 products (Tea, Coffee and
Milk). How can I forecast the sales base on
historical unit price per product?
Historical Data
Month Sales Tea Coffe Milk
1 44439 515 541 928
2 43936 929 692 711
3 44464 800 710 824
4 41533 979 675 758
5 46343 1165 1147 635
6 44922 651 939 901
7 43203 847 755 580
8 43000 942 908 589
9 40967 630 738 682
10 48582 1113 1175 1050
11 45003 1086 1075 984
12 44303 843 640 828
13 42070 500 752 708
14 44353 813 989 804
15 45968 1190 823 904
16 47781 1200 1108 1120
17 43202 731 590 1065
18 44074 1089 607 1132
19 44610 786 513 839
Data Analysis
Summary Output
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.803398744
R Square 0.645449542
Adjusted R Square 0.57453945
Standard Error 1252.763898
Observations 19
ANOVA
df SS MS F Significance F
Regression 3 42856229.89 14285410 9.102365 0.001126532
Residual 15 23541260.74 1569417
Total 18 66397490.63
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 35102.90045 1837.226911 19.10646 6.11E-12 31186.944 39018.8569 31186.944 39018.8569
Price Tea 2.065953296 1.664981779 1.240826 0.233727 -1.482871344 5.614777936 -1.482871344 5.614777936
Price Coffee 4.176355531 1.681252566 2.484074 0.025288 0.592850531 7.759860531 0.592850531 7.759860531
Price Milk 4.790641037 1.789316107 2.677359 0.017223 0.976804052 8.604478023 0.976804052 8.604478023
Sales Prediction = 35,102.90+2.06 (Price Tea)
+4.17 (Price Coffee) + 4.79 (Price Milk)
Forecast Chart
Sales Forecast
44439 42863.99
43936 43307.07
44464 43657.66
41533 43564.31
46343 45326.54
44922 44674.48
43203 42773.37
43000 43650.19
40967 42744.04
48582 47324.03
45003 46535.27
44303 43473.5
42070 42659.16
44353 44752.07
45968 45315.47
47781 47559.16
43202 44169.51
44074 45298.81
42879.18
36000
38000
40000
42000
44000
46000
48000
50000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Sales Forecast
Case Study
How can I forecast the sales if qualitative
factors (season, event, etc) involves?
Data Conversion
Year Quarter Sales GDP Unemp Int
2000 1 2007 2431 5.9 9.4
2000 2 2562 2640 5.7 9.4
2000 3 2385 2595 5.9 9.7
2000 4 2520 2701 6 11.9
2001 1 2142 2785 6.2 13.4
2001 2 2130 2509 7.3 9.6
2001 3 2190 2570 7.7 9.22
2001 4 2370 2667 7.4 13.6
2002 1 2208 2878 7.4 14.4
2002 2 2196 2835 7.4 15.3
2002 3 1758 2897 7.4 15.1
2002 4 1944 2744 7.4 11.8
2003 1 2094 2582 8.3 12.8
2003 2 1911 2613 8.8 12.4
2003 3 2031 2529 9.4 9.3
2003 4 2046 2544 10 7.9
2004 1 2502 2633 10.7 7.8
2004 2 2238 2878 10.4 8.4
2004 3 2394 3051 9.4 9.1
2004 4 2586 3274 8.5 8.8
2005 1 2898 3594 7.9 9.2
2005 2 2448 3774 7.5 9.8
2005 3 2460 3861 7.5 10.3
2005 4 2646 3919 7.2 8.8
2006 1 2988 4040 7.4 8.2
2006 2 2967 4133 7.3 7.5
2006 3 2439 4303 7.1 7.1
2006 4 2598 4393 7 7.2
2007 1 3045 4560 7.1 8.9
2007 2 3213 3487 7.1 7.7
2007 3 2685 4716 6.9 7.4
2007 4 3213 4796 6.8 7.4
Q1 Q2 Q3 GDP Unemp Int
1 0 0 2431 5.9 9.4
0 1 0 2640 5.7 9.4
0 0 1 2595 5.9 9.7
0 0 0 2701 6 11.9
1 0 0 2785 6.2 13.4
0 1 0 2509 7.3 9.6
0 0 1 2570 7.7 9.22
0 0 0 2667 7.4 13.6
1 0 0 2878 7.4 14.4
0 1 0 2835 7.4 15.3
0 0 1 2897 7.4 15.1
0 0 0 2744 7.4 11.8
1 0 0 2582 8.3 12.8
0 1 0 2613 8.8 12.4
0 0 1 2529 9.4 9.3
0 0 0 2544 10 7.9
1 0 0 2633 10.7 7.8
0 1 0 2878 10.4 8.4
0 0 1 3051 9.4 9.1
0 0 0 3274 8.5 8.8
1 0 0 3594 7.9 9.2
0 1 0 3774 7.5 9.8
0 0 1 3861 7.5 10.3
0 0 0 3919 7.2 8.8
1 0 0 4040 7.4 8.2
0 1 0 4133 7.3 7.5
0 0 1 4303 7.1 7.1
0 0 0 4393 7 7.2
1 0 0 4560 7.1 8.9
0 1 0 3487 7.1 7.7
0 0 1 4716 6.9 7.4
0 0 0 4796 6.8 7.4
Data Analysis
Summary Output
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.835850806
R Square 0.698646571
Adjusted R Square 0.626321748
Standard Error 234.2782152
Observations 32
ANOVA
df SS MS F Significance F
Regression 6 3181157.823 530193 9.659845 1.56789E-05
Residual 25 1372157.052 54886.28
Total 31 4553314.875
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 2468.149196 565.3001581 4.366086 0.000193 1303.891736 3632.406655 1303.891736 3632.406655
Q1 98.63689332 118.1751743 0.834667 0.411811 -144.7494321 342.0232188 -144.7494321 342.0232188
Q2 68.23580594 118.146654 0.577552 0.568732 -175.0917808 311.5633927 -175.0917808 311.5633927
Q3 -175.311164 117.2567064 -1.49511 0.147404 -416.8058691 66.18354178 -416.8058691 66.18354178
GDP 0.274026559 0.069927467 3.918726 0.00061 0.130008246 0.418044872 0.130008246 0.418044872
Unemp -47.2973846 36.21216334 -1.30612 0.203403 -121.8777304 27.2829613 -121.8777304 27.2829613
Int -56.5799921 21.56606503 -2.62357 0.014617 -100.9961341 -12.16385012 -100.9961341 -12.16385012
Sales forecast
Sales Forecast
2007 2423.114
2562 2459.42
2385 2177.2
2520 2252.524
2142 2279.95
2130 2336.706
2190 2112.51
2370 2081.078
2208 2192.292
2196 2099.26
1758 1884.048
1944 2203.876
2094 2159.108
1911 2136.202
2031 2016.516
2046 2246.706
2502 2342.302
2238 2359.292
2394 2170.844
2586 2466.676
2898 2658.676
2448 2662.576
2460 2414.664
2646 2704.766
2988 2860.98
2967 2900.332
2439 2735.452
2598 2934.482
3045 2978.07
3213 2721.468
2685 2841.104
3213 3043.044
0
500
1000
1500
2000
2500
3000
3500
1 6 11 16 21 26 31
Sales Forecast
4-83
Sample Coefficient of Correlation
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You want to achieve:
No pattern or direction in forecast error
Error = (Y
i
- Y
i
) = (Actual - Forecast)
Seen in plots of errors over time
Smallest forecast error
Mean square error (MSE)
Mean absolute deviation (MAD)
Guidelines for Selecting
Forecasting Model
^
4-86
Time (Years)
Error
0
Desired Pattern
Time (Years)
Error
0
Trend Not Fully
Accounted for
Pattern of Forecast Error
Multi Regression Forecasting
ONE WAY ANOVA
Module 2

One Way Anova
Summary Out
Anova: Single Factor
SUMMARY
Groups Count Sum Average Variance
Front 5 45 9 2.5
Back 4 56 14 3.333333
Middle 3 33 11 1
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 55.66667 2 27.83333 11.38636 0.003426 4.256495
Within Groups 22 9 2.444444
Total 77.66667 11
2 Way Anova
Two Way Anova Summary
Anova: Two-Factor Without Replication 17.5
SUMMARY Count Sum Average Variance
Distrik 1 4 26 6.5 28.33333 -11
Distrik 2 4 59 14.75 4.916667 -2.75
Distrik 3 4 85 21.25 10.91667 3.75
Distrik 4 4 70 17.5 31 0
Distrik 5 4 110 27.5 69.66667 10
-17.5
Rep 1 5 75 15 63.5 -2.5
Rep 2 5 67 13.4 59.3 -4.1
Rep 3 5 102 20.4 104.3 2.9
Rep 4 5 106 21.2 67.7 3.7
ANOVA
Source of Variation SS df MS F P-value F crit
Rows 970.5 4 242.625 13.95065 0.000182 3.259166727
Columns 225.8 3 75.26667 4.327743 0.027588 3.490294821
Error 208.7 12 17.39167
14.44645 4.003547
Total 1405 19
Distrik 2 Distrik 2
Rep 4 forecast Rep 3
Mean 18.45 17.65
Lower 10.44291 9.642906
Upper 26.45709 25.65709
JUDGEMENTAL FORECASTING
Module 4
Multiple Regression Analysis
Any Question?
The unique challenges associated with
providing effective customer service to
phone callers.
Identify the strengths and weaknesses of
your telephone styles and techniques.
Identify effective telephone skills

MANAGING THE FORECASTING
PROCESS
Module 5
Learning Objectives
Identify methods for diffusing customer anger
or hostility
Develop strategies for handling difficult
customers
Identify which verbal and non-verbal
messages exacerbate a difficult situation and
which diffuse a difficult situation
Strategies to Handle Difficult
Customer Situation
1. Listen
Use active and reflective listening
skills

2. Empathize
Putting yourself in customer shoes
Connect with persons feeling
making a statement that tells the person
we understand the feeling
paraphrasing his or her words to show
the person we understand the issue
Stick to what Company can and cant
do
Strategies to handle Difficult
Customer Situation
3. Respond professionally
Use customers name
Maintain friendly manner
Use appropriate body
language

4. Recognize underlying
factors
Customer act for a reason
Negative emotion
Strategies to Handle Difficult
Customer Situation
5. Ask question
Be sure to listen to everything
6. Give feedback
Treat the public as customer
seeking service
Play tour tone of voice
7. Summarize
Communicate what you will
do and when you will do it
Remember to under promise
and over deliver
Limited English Speaking
Be patient and concentrate
Remember, the customer is just as frustrated as you are
Speak slowly and distinctly
Dont speak so slowly that it appears to be an insult
Be extra courteous
you really do care and want to help
Avoid using slang or industry jargon
Use plain, simple English. Dont use terms or phrases that will only add
to the confusion
Speak in normal tone of voice
Dont shout. Speaking loudly wont help
Dont try to listen to every word
Listen carefully for key words and phrases
Limited English Speaking
Reiterate what has been said
Once the customer has told you what the problem is, summarize
Dont ask do you understand?
The customer may feel you are insulting him or her.
Avoid humor
Stick to the problem. Different cultures view humor in different ways.
Write it down
Use simple, short sentences.
If you speak another language, try using it
The client may understand the other language better than English
Develop a list of employee who speak foreign languages
Use this as a resource for helping non-English speaking customers.
Listen to foreign language tape
Tips for Long-Winded Caller
People will monopolize anothers time on the telephone
Dont think silent or giving short answer will work
dont ask questions
Refocus the attention
Stating a relevant point
Using PRC technique
(Paraphrase, Reflect, Close)
Budget time to listen
Budget what you can affordbut dont tell the caller you are doing this
Establish mutual time limit
take control of the conversation before it gets too far
Patience: Give extra minute or two
Let the other party go gracefully with statements such as:I know you are busy. I
appreciate your help. .Thanks for your time. The information you have provided is very
helpful. Ill be back in touch as soon as.

Strategies to Handle
Argumentative Customer
Speak softly
the customer must be quiet in order to hear
you.
Ask for their opinion
If you give them some control by asking a
question, they are liable to ease up.
Take a break, dont get drawn in
excuse yourself briefly, count to 10, or get a
drink of water
Concentrate on the points of the
argument
Deal with these points one at a time.
Strategies to Handle Verbally
Abusive Customer
Remember, Customer isnt angry with you
but at the agency, the situation, or something
else completely unrelated
Talk quietly
talk quietly so that he or she has to be quieter
to hear you.
Talk at normal pace
If you begin to talk quickly, it will only make
matters worse
Let the consumer know the consequences
When you use this language, it makes it
impossible for me or anyone to assist you.
Strategies to Handle Threatening
Customer
Threat can be an attempt to
intimidate you
Keep calm and keep your
responses focused on the
issue at hand
Strategies to Handle Threatening
Customer
Try to avoid getting into discussion of the threat
Lead the conversation back to the fundamental issue in
dispute
Evaluate customer ability to make good on threat
and decide what to do from there
Dont overreact
Look for signs of drug or alcohol use
Advice consumer of the repercussion
Before the threats escalate, calmly advise the customer of
the repercussions of the threats,
Terminate the interview
document the threat, warn/alert the appropriate people
(supervisor, reception staff, etc.)
Strategies to Handle Hostile/Angry
Customer
1. An angry customer is most
likely not angry with you
Dont
Take the anger personally
Blame the customer
Avoid blame
Dominate the conversation
Strategies to Handle Hostile/Angry
Customer
2. Detach yourself from the
Customers Hostility
Maintain self control
3. Hostility curve
Lets wait, hear him/her out
Strategies to Handle Hostile/Angry
Customer
Listen
When the customer stops talking, start giving feedback to indicate you
heard his or her key points
Empathize
you understand the situation from the customers perspective. Express
empathy for the feelings expressed or demonstrated.
Apologize
Apologize when the agency is at fault
Service
S =Say youre sorry. E = Expedite solutions. R = Respond to the customer. V = Victory to the
customer. I = Implement improvements. C = Communicate results. E = Extend the
outcome.
Summarize
Clearly communicate what you will do and when you will do it
Saying No
Sometimes you have to say no, but if you do it right, you can
still get a thank you for your service
Saying No
Explain why it cant be done
Dont quote policy
Dont say, Because its the law.
Dont be patronizing
Dont talk down to the customer.
Offer alternatives when u can
Try to help the customer find
solutions to the problem.
Avoid making excuses
Im sorry your case hasnt been
processed yet
Eliminate negative phrases
Dont mention other/similar
complaints
Group Activity
Price for Handling Difficult Customer
Any Question?
Methods for diffusing the anger and
hostility of customers.
Strategies for handling difficult customers
SUMMARY & WRAP UP
Module 6