Sales Forecasting: Regression Analysis

Case 1

A consumer durable producer desires to build a practically implementable sales forecasting

model that would enable the firm to forecast sales of its products territory-wise on a monthly
basis based on its predictor variables. For this purpose, they have conducted a suitable research.
Initially, a preliminary research was conducted and a detailed set of territory specific parameters
that could have an impact on sales were identified. These were:

a) Market Potential

b) Number of Dealers

c) Number of Sales Staff

d) Competitor Activity measured on a 5 point scale (1= V Low; 5= V High)

e) Number of Service Staff

f) Existing Customer Base.

Historical data was collected on Sales and the above variables month-wise, territory-wise for the
past 24 months. A data extract of this research is provided in the Excel file for your analysis.

Case questions:
1. Determine the Bivariate Correlations between each variable pair.
2. Build alternate Regression Models to forecast sales based on its predictor variables.
State the Goodness of Fit for each model.
3. Recommend a suitable model for implementation by the firm, which is a practical
trade-off between Goodness of Fit on one side and the effort/resources required to
measure each predictor variable on a regular basis on the other side. Justify your
answer.
 Sales Forecasting: Regression Analysis

Case 2

Pizza Hut desires to build a practically implementable Sales forecasting model that would enable
the firm to forecast Sales territory-wise, month-wise based on the following predictor variables :

a) Number of Delivery boys

b) Advertising Spend

c) Number of Outlets

d) Pizza varieties served

e) Competitor Activity (1= V Low; 5= V High)

f) Customer base for Home deliveries

A data extract of this research is provided in the Excel file for your analysis.

Case questions:

1. Determine the Bivariate Correlations between each variable pair.

2. Build alternate Regression Models to forecast Sales based on its Causative variables. State
the Goodness of Fit for each model.

3. Recommend a suitable model for implementation by the firm, which is a practical trade-off
between Goodness of Fit on one side and the effort/resources required to measure each
Causative variable on a regular basis on the other side. Justify your answer.

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