Glossary: Sales forecasting

Unit 4.3 Glossary - Sales forecasting

3-point moving average

The arithmetic mean of three consecutive numbers, such as sales revenue figures for the past three months.

4-point moving average

The arithmetic mean of four consecutive numbers, such as sales revenue figures for the past four months.

Correlation

The relationship between two sets of numbers or variables, such as sales revenue at different times of the year.

Cyclical variations

The recurring fluctuations in sales revenues due to the trade cycle (or business cycle).

Extrapolation

A forecasting technique that identifies the trend from using past data and then extending this trend line to predict future sales.

Mean

The most common measure of an average, by calculating the sum of all the numbers in the data set divided by the number of items in that data set.

Median

The average based on the middle value of the data set, which splits values in the higher half from those in the lower half.

Modal

The average as measured by the number or value that occurs most frequently in a data set.

Moving average

A mathematical method used to discover the underlying trend in a data set by smoothing out such variations in a data set.

Random variations

Irregular, erratic or unexpected fluctuations in sales revenues, caused by unexpected and unpredictable factors.

Range

The difference between the highest and the lowest values in a data set.

Sales forecasting

A quantitative technique used to predict a firm’s level of sales revenue over a given time period.

Seasonal variations

Foreseeable periodic fluctuations in sales revenues over a known period of time, such as certain months or times of the year.

Time series analysis

A statistical technique used to identify trends in historical data, such as the figures for a firm’s monthly sales revenues.

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