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Sales forecasting in the plywood industry

University of British Columbia

This thesis presents a general review of sales forecasting literature with particular attention to the preparation of the sales forecast, the pre-planning activities and the review. In addition, forecasts are developed which show the expected sales of domestic softwood plywood to be realized by the plywood industry for the years 1964 and 1968. A procedure is then presented that Crown Zellerbach Company can follow in using the industry forecast to ascertain their share of the expected softwood plywood sales. Sales forecasting is an essential prerequisite to company planning. Therefore, forecasts must be as accurate as possible because many activities within the firm are based on the sales forecasts. With the assistance of sales forecasts, vital marketing, financial and production plans ultimately emerge, together with their supporting schedules. The person responsible for the forecasting task must acquire not only a detailed understanding of company activities but also a thorough knowledge of the characteristics of a sound forecasting operation. The forecaster must be familiar with the various judgment, survey and statistical techniques available for developing forecasts and he must understand the necessity of carrying out numerous pre-performance and post-performance activities. The pre-performance activities must be dutifully carried out if the most useful forecasting method is to be chosen. Post-performance activities are equally important. A time-table for review and revision when necessary must be drawn up ahead of time if proper control is to be exercised over the forecast. A simple regression equation and three multiple regression equations are developed with the intention of using one or more of them to forecast industry softwood plywood sales for the years 1964 and 1968. The three multiple linear regression equations are rejected because each of them possesses one or more unacceptable negative constants. The simple linear regression equation has an extremely high coefficient of correlation and a small standard error of estimate. Since this equation contains these desirable features and seems to incorporate no underlying fallacy, this simple regression equation is the one chosen to forecast industry plywood sales. The share-of-market approach is used to determine the proportion of the industry sales to be captured by Crown Zellerbach Company. The total projected industry sales figures are multiplied by a percentage which represents the company's present share of the total market. The figures that result represent the anticipated plywood sales to be achieved by Crown Zellerbach Company for the years 1964 and 1968. Crown Zellerbach should not depend solely on the technique developed in this thesis for forecasting plywood sales. They should continue to use the subjective or judgment technique that they have used for a number of years, but they would follow a better course if they used one or more statistical or survey methods in addition to the present method. A final forecast could be selected after an analysis had been made of the forecasted figures developed by the various methods.

Text

2011-09-23

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http://hdl.handle.net/2429/37604

Business Administration - Marketing

University of British Columbia

Graduate