Introduction

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Forecasting in most businesses almost always come down to first forecasting sales volumes (quantity rather than value). Once the sales volumes have been determined, it follows that everything else can be estimated based on this forecast.

For example, if I can forecast how many goods I am going to sell, I can in turn estimate the costs and resources involved in ensuring that we can obtain or produce these goods in the first place. So essentially, forecasts generally revolve around sales, while the rest of the projections made are in actual fact estimations based on these forecasts.

The initial forecast of sales requires educated guesswork, while the estimations based on these forecasts requires arithmetic and logic.

The item that is being forecast may not always be referred to as sales. If the item being forecast is not directly a sales item, it will usually still be a indicator of demand. For example, a non-profit organisation might forecast donations and a government organisation might forecast number of applications.