Deck 10: Developing Forecasts

Question 1

Forecasts provide the basis for all of the following sales management decisions except

A) designing territories.
B) evaluating prospective accounts.
C) determining sales compensation levels.
D) evaluating salesperson performance.
E) planning integrative meetings.

Answer 1

E

Question 2

Every forecast should be defined in terms of

A) geographic area, salesperson, and estimated accuracy.
B) territory, product level, and sales volume.
C) sales volume, salesperson, and estimated accuracy.
D) geographic area, product level, and time period.
E) sales potential, horizon, time period.

Answer 2

D

Question 3

The best possible level of industry sales in a given geographic area for a specific time period is the definition for

A) market forecast.
B) sales potential.
C) salesperson quotas.
D) market potential.
E) sales forecast.

Answer 3

D

Question 4

The best possible level of firm sales in a given geographic area for a specific time period is the definition for

A) market forecast.
B) sales potential.
C) salesperson quotas.
D) market potential.
E) sales forecast.

Question 5

The expected level of company sales, given a specific strategy in a given geographic area for a specific time period, is the definition for

A) market forecast.
B) sales potential.
C) salesperson quotas.
D) market potential.
E) sales forecast.

Question 6

The expected level of industry sales given a specific industry strategy in a given geographic area for a specific time period is the definition for

A) market forecast.
B) sales potential.
C) salesperson quotas.
D) sales forecast.
E) market potential.

Question 7

An estimate of the highest possible level of personal computer sales by all brands in the district covering Oklahoma and Texas for the upcoming year is an example of a

A) district market forecast.
B) district sales potential estimate.
C) district sales quota.
D) district market potential.
E) district sales forecast.

Question 8

When a sales manager makes a determination of the best possible level of sales for the upcoming year for his/her firm's personal computers in the Louisiana district, he/she has estimated the

A) district market forecast.
B) district sales potential.
C) district sales quota.
D) district market potential.
E) district sales forecast.

Question 9

This forecasting approach begins by the development of company forecasts by individuals at the business unit level:

A) bottom-up approach.
B) salesforce composite method.
C) top-down approach.
D) naive approach.
E) survey of buying intentions.

Question 10

The _________ consists of different methods for developing sales forecasts for individual accounts.

A) bottom-up approach
B) salesforce composite method
C) top-down approach
D) naive approach
E) survey of buying intentions

Question 11

Which of the following represents the correct sequence of forecasting using a "top-down" approach to forecasting?

A) Forecast of general economic and business conditions for the country as a whole --> market potential for relevant industry --> sales potential for company as a percentage of industry sales --> company sales forecast --> sales managers' forecasts
B) Forecast of general economic and business conditions for the country as a whole --> sales potential for company as a percentage of industry sales --> market potential for relevant industry --> company sales forecast --> sales managers' forecasts
C) Market potential for relevant industry --> forecast of general economic and business conditions for the country as a whole --> --> sales potential for company as a percentage of industry sales --> company sales forecast --> sales managers' forecasts
D) Forecast of general economic and business conditions for the country as a whole --> market potential for relevant industry --> company sales forecast --> sales potential for company as a percentage of industry sales --> sales managers' forecasts
E) Forecast of general economic and business conditions for the country as a whole --> company sales forecast --> market potential for relevant industry --> sales potential for company as a percentage of industry sales --> sales managers' forecasts

Question 12

Which of the following represents the correct sequence of forecasting using a "bottom-up" approach to forecasting?

A) Salesperson's forecasts of accounts --> Combined into territory forecasts --> Combined into district, region, and zone forecasts --> Company sales forecast
B) Salesperson's forecasts of accounts --> Combined into district, region, and zone forecasts --> Combined into territory forecasts --> Company sales forecast
C) Salesperson's forecasts of accounts --> Combined into district, region, and zone forecasts --> Company sales forecast --> Combined into territory forecasts
D) Company forecasts -->Salesperson's forecasts of accounts --> Combined into territory forecasts --> Combined into district, region, and zone forecasts
E) None of the above.

Question 13

__________ develops a company forecast by calculating the average company sales for previous years.

A) Moving averages
B) Exponential smoothing
C) Decomposition methods
D) Breakdown methods
E) Delphi methods

Question 14

__________ is a type of moving averages method, except that company sales in the most recent year are weighted differently from company sales in past years.

A) Expedited smoothing
B) Exponential smoothing
C) Decomposition
D) Breakdown
E) Delphi

Question 15

__________ involve different procedures that break down previous company sales data into four major components: trend, cycle, seasonal, and erratic

A) Moving averages
B) Exponential smoothing
C) Decomposition methods
D) Breakdown methods
E) Delphi methods

Question 16

Decomposition methods involve different procedures that break down previous company sales data into _______ major components.

A) two
B) three
C) four
D) five
E) six

Question 17

The market factor method of sales forecasting can be described as

A) forecasting different market potential based on the use of various marketing strategies.
B) identifying one or more factors that are related to sales at the zone, region, district, territory, or account levels and using these factors to break down the overall company forecast into forecasts at these levels.
C) forecasting based on a survey of the firm's customers to ascertain what products and amounts of these products they expect to purchase within some future period.
D) taking each salesperson's forecast for his or her territory and multiplying it by an exponential factor based on sales management's judgment of future market conditions.
E) soliciting the judgment of a group of experienced managers that are considered experts on market trends and growth potential.

Question 18

The survey of buyer intentions method of sales forecasting can be described as

A) forecasting different market potential based on the use of various marketing strategies.
B) identifying one or more factors that are related to sales at the zone, region, district, territory, or account levels and using these factors to break down the overall company forecast into forecasts at these levels.
C) forecasting based on a survey of the firm's customers to ascertain what products and amounts of these products they expect to purchase within some future period.
D) taking each salesperson's forecast for his or her territory and multiplying it by an exponential factor based on sales management's judgment of future market conditions.
E) soliciting the judgment of a group of experienced managers that are considered experts on market trends and growth potential.

Question 19

The forecasting method that involves any procedure that asks individual accounts about their purchasing plans for a future period and translates these responses into account forecasts is the

A) top-down approach.
B) naive method.
C) Delphi method.
D) survey of buyer intentions.
E) account forecasting method.

Question 20

The jury of executive opinion method of sales forecasting can be described as

A) forecasting different market potential based on the use of various marketing strategies.
B) identifying one or more factors that are related to sales at the zone, region, district, territory, or account levels and using these factors to break down the overall company forecast into forecasts at these levels.
C) forecasting based on a survey of the firm's customers to ascertain what products and amounts of these products they expect to purchase within some future period.
D) taking each salesperson's forecast for his or her territory and multiplying it by an exponential factor based on sales management's judgment of future market conditions.
E) soliciting the judgment of a group of experienced managers that are considered experts on market trends and growth potential in order to formulate a forecast.

Question 21

The forecasting technique that involves a panel of managers each submitting an anonymous forecast for an account which are summarized into a report and then sent to each panel member is the

A) executive decomposition method.
B) Delphi method.
C) executive decision method.
D) top-down approach.
E) jury of executive opinion method.

Question 22

The forecasting approach that involves various procedures where salespeople provide forecasts for their assigned accounts is the

A) top-down approach.
B) survey of buying intentions.
C) naive approach.
D) trend projection.
E) salesforce composite method.

Question 23

_____________ is a statistical technique that can be used to develop sales forecasts at all organizational levels, as well as companywide.

A) The top-down approach
B) Regression analysis
C) The naive approach
D) Trend projection
E) The salesforce composite method

Question 24

Which of the following statements regarding the regression forecasting approach is false?

A) It can be used to develop sales forecasts and establish sales quotas at the account and territory levels, but cannot be used at higher organizational levels.
B) It develops sales forecasts that explicitly consider the characteristics of each territory.
C) Regression forecasts can be translated directly into sales quotas.
D) It incorporates measurements of specific environmental, organizational, and salesperson factors as well as sales for each territory in the previous year.
E) The regression model provides information concerning relationships between determinant factors and sales.

Question 25

In the regression method for developing sales quotas or forecasts, which of the following would be considered an organizational factor?

A) Market potential
B) Salesperson's experience
C) Concentration of accounts
D) Span of control
E) Salesperson's motivation

Question 26

According to one study, the most important criteria used to select a specific forecasting method is

A) the accuracy of the forecasting method.
B) ease of use.
C) data requirements.
D) the cost of the method.
E) familiarity with the method.

Question 27

Which of the following is not a strength of the moving averages method of forecasting?

A) Results can be tested statistically.
B) It is well suited to situation in which sales forecasts are needed for a large number of products.
C) It is good for products with fairly stable sales.
D) It smoothes out small random fluctuations.
E) It can compensate to some degree for trends if double moving average model is used.

Question 28

A forecasting method that provides more weight to recent data points is

A) the Delphi method.
B) the salesforce composite.
C) exponential smoothing.
D) moving averages.
E) the decomposition method.

Question 29

This forecasting method is not well suited to firms with a large number of products.

A) the Delphi method
B) Salesforce composite
C) Jury of executive opinion
D) Moving averages
E) Decomposition method

Question 30

This forecasting method acknowledges three key factors affecting sales--trend, seasonal , cycles.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Moving averages
E) Decomposition method

Question 31

This forecasting method does not lend itself to longer-range forecasts.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Moving averages
E) Decomposition method

Question 32

This forecasting method is well suited to situations in which sales forecasts are needed for a large number of products.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Moving averages
E) Decomposition method

Question 33

This forecasting method provides an opportunity to gain customer feedback about possible problems with the firm's products.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Survey of buyer intentions
E) Decomposition method

Question 34

A strength of this forecasting method is that it eliminates the need for committee or group meetings.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Moving averages
E) Decomposition method

Question 35

This forecasting method allows for voicing of unusual opinions and anonymous mind changing.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Moving averages
E) Decomposition method

Question 36

This forecasting method may enhance salesforce morale by letting their input guide decisions.

A) Delphi method
B) Salesforce composite
C) Exponential smoothing
D) Moving averages
E) Decomposition method

Question 37

All of the following are weaknesses of regression analysis except

A) requires a large amount of data to produce a reliable model.
B) not well suited to firms with more than one product.
C) requires some technical skill and expertise to use.
D) factors affecting market response must be accurately identified.
E) does not consider effects of seasonal variations.

Question 38

This forecasting method identifies unknown factors affect market response.

A) Delphi method
B) Salesforce composite
C) Jury of executive opinion
D) Survey of buyer intentions
E) Regression analysis

Question 39

A sales forecast provides the basis for determining salesforce size.

Question 40

A sales forecast provides the basis for evaluating salesperson performance.

Question 41

A sales forecast will be affected by the length of the time period and the geographic area involved in the forecast.

Question 42

The term forecast is ordinarily used to refer to a prediction for a future time period.

Question 43

Sales managers are typically most concerned with total firm forecasts.

Question 44

A forecast of market potential is the expected level of industry sales, given a specific industry strategy in a given geographic area for a specific tune period.

Question 45

A sales forecast is the best possible level of firm sales in a given geographic area for a specific time period.

Question 46

Sales potential provides an assessment of overall demand opportunity available to all firms in an industry.

Question 47

If a firm changes its plans regarding the use of a specific marketing strategy for a future time period, then its sales forecast will normally change as well.

Question 48

If you are preparing industry sales forecasts for the upcoming year, the first forecast you should prepare would be a forecast of sales potential.

Question 49

If you predict a specific level of district sales for your firm's personal computers, given your firm's expected strategy, you have prepared a sales forecast.

Question 50

Market forecasts and sales forecasts are most often used to identify opportunities and to guide the allocation of selling efforts.

Question 51

Under-forecasting can result in lost sales and profits.

Question 52

Inaccurate forecasts may result in detrimental effects such as increased inventory costs.

Question 53

In top-down approaches, company personnel provide aggregate company forecasts, which sales managers must break down into zone, region, district, territory, and account forecasts.

Question 54

Forecasts that are initially made at the account level by salespeople are a form of the top-down approach.

Question 55

Forecasts that are initially made at the account level by salespeople are a form of the bottom-up approach.

Question 56

The moving averages method of forecasting develops a company forecast by calculating the average company sales for previous years.

Question 57

Although useful, the moving averages method of forecasting suffers from being complicated and cumbersome to use.

Question 58

Exponential smoothing is a type of moving averages method of forecasting.

Question 59

A critical aspect of the exponential smoothing method of forecasting involves determining the appropriate alpha weight for this year's company sales.

Question 60

Decomposition methods involve different procedures that break down previous company sales data into four major components: trend, cycle, seasonal, and economic events.

Question 61

Market factor methods typically involve identifying one or more factors that are related to sales at the zone, region, district, territory, or account levels and using these factors to break down the overall company forecast into forecasts at these levels.

Question 62

Use of the market factor method is not widespread in the sales management area.

Question 63

The survey of buyer intentions method is any procedure that asks individual accounts about their purchasing plans for a future period and translates these responses into account forecasts.

Question 64

The Delphi method of forecasting is any procedure that asks individual accounts about their purchasing plans for a future period and translates these responses into account forecasts.

Question 65

The jury of executive opinion method involves any approach where executives of the firm use their expert knowledge to forecast sales to individual accounts.

Question 66

The bottom-up approach and the salesforce-composite method represent entirely different perspectives for developing forecasts.

Question 67

The salesforce composite method involves various procedures where salespeople provide forecasts for their assigned accounts.

Question 68

In the regression approach to developing sales forecasts, the determinant variables and measures are typically different depending upon whether the planning and control unit is a territory, district, region, or zone.

Question 69

Most firms use multiple forecasting approaches and methods.

Question 70

When using various approaches to forecast produces similar results, these results can be combined to produce a final forecast.

Question 71

Sales forecasting software is available to help sales managers with sales forecasting.

Question 72

The selection of forecasting methods often represents a tradeoff between the accuracy of the method and the ease with which it can be implemented.

Question 73

A weakness of the moving averages forecasting method is that it adjusts slowly to changes in sales.

Question 74

Moving averages forecasting is good for products with fairly stable sales.

Question 75

Exponential smoothing provides more weight to recent data points.

Question 76

Exponential smoothing is poor for medium- and long-range forecasts.

Question 77

A weakness of the decomposition method of forecasting is that it is difficult to understand.

Question 78

A strength of the moving averages method of forecasting is that it provides more weight to recent data points.

Question 79

A strength of the exponential smoothing method of forecasting is that it provides fairly good accuracy for short term forecasts.

Question 80

A weakness of the decomposition method of forecasting is that it requires a large amount of past data.