There are various methods of sales forecasting and I am explaining the most common and popular methods. The first and the simplest method is the naive approach, in which a company considers the last period sales as the current period forecast. Secondly, fixed average method, in which the company takes the sum of the sales of some previous periods and then divide it by the total number of periods. Thirdly, moving average forecast, in which the company takes 3,4,5,6... Periods previous data and divide it by number of periods to forecast the next period. It is very similar to fixed method but in fixed method the number of periods increases after passing each period while in moving average the same number of periods are taken every time. Fourthly, exponential moving average method, in which weights are assigned to the periods and the last period is given more weight to determine future sales. Moreover, trend analysis methods and seasonal analysis are used to forecast sales.
