Sales Volume Forecasting: A Comparison of Management, Statistical, and Combined Approaches.

This study reports on a comparison of statistical, management, and combined predictions of a key variable used to prepare sales and profit forecasts at a Fortune 500 manufacturing company. The management of the firm considers the predictor variable, sales volume, to be a substitute for financial performance. Two organizational subgroups, Sales and Production, are involved in preparing sales volume estimates for use by the company. The results show that statistical models can produce accurate sales volume forecasts, but forecasts relying on both management judgment and quantitative methods are more useful to management. A computerized model of the revenue and cost structure of the company, and management judgment, are ultimately used to transform sales volume projections into formal earnings and cash flow statements for top management decision making.