Sales Forecasting (DP IB Business Management: HL): Exam Questions

Seascape Cruises is a luxury cruise operator specialising in voyages to remote destinations. To better manage its resources, the company relies heavily on sales forecasting. Recent forecasts suggest a 20% increase in demand during peak summer months, primarily due to rising consumer interest in adventure travel.

However, changes in economic conditions, including rising inflation and fluctuating exchange rates, have raised concerns about the reliability of the forecast. Competitor promotions also present a challenge, as rival cruise lines are offering steep discounts for similar routes.

Seascape Cruises is a luxury cruise operator specialising in voyages to remote destinations. To better manage its resources, the company relies heavily on sales forecasting. Recent forecasts suggest a 20% increase in demand during peak summer months, primarily due to rising consumer interest in adventure travel.

However, changes in economic conditions, including rising inflation and fluctuating exchange rates, have raised concerns about the reliability of the forecast. Competitor promotions also present a challenge, as rival cruise lines are offering steep discounts for similar routes.

Bright Bake is a small bakery specialising in premium artisan bread. The bakery uses sales forecasts to manage its inventory and staffing, especially during seasonal peaks like holidays. Recent forecasts predict a 30% increase in sales during the winter season due to promotional campaigns and consumer demand for festive baked goods.

However, changing economic conditions, such as rising ingredient costs and inflation, may affect the accuracy of these forecasts. Bright Bake must carefully adjust its operations to balance increased demand with the rising cost of production.

Bright Bake is a small bakery specialising in premium artisan bread. The bakery uses sales forecasts to manage its inventory and staffing, especially during seasonal peaks like holidays. Recent forecasts predict a 30% increase in sales during the winter season due to promotional campaigns and consumer demand for festive baked goods.

However, changing economic conditions, such as rising ingredient costs and inflation, may affect the accuracy of these forecasts. Bright Bake must carefully adjust its operations to balance increased demand with the rising cost of production.

Jet Wheels is a bike rental company operating in a coastal city known for tourism. The company uses sales forecasting to plan for fluctuations in demand throughout the year. For instance, forecasts predict a surge in rentals during the summer due to increased tourist activity.

Jet Wheels also faces challenges such as unexpected weather changes and competition from ride-sharing apps, which may influence the accuracy of its forecasts. Despite these challenges, sales forecasts remain essential for managing inventory, staffing, and promotional efforts.

Jet Wheels is a bike rental company operating in a coastal city known for tourism. The company uses sales forecasting to plan for fluctuations in demand throughout the year. For instance, forecasts predict a surge in rentals during the summer due to increased tourist activity.

Jet Wheels also faces challenges such as unexpected weather changes and competition from ride-sharing apps, which may influence the accuracy of its forecasts. Despite these challenges, sales forecasts remain essential for managing inventory, staffing, and promotional efforts.

BrightGreen Ltd. manufactures eco-friendly cleaning products. The company is reviewing its sales forecast for the upcoming year, based on sales from the past three years. It expects steady growth as sustainability trends continue to grow in popularity.

EcoDelight Cafés Ltd is a rapidly expanding chain of environmentally conscious coffee shops focused on sustainability, innovation and ethical business practices. Founded five years ago by Sarah Patel, the business emerged to address a market gap for eco-friendly cafés. Sarah’s vision was inspired by her frustration with the coffee industry's lack of environmentally conscious options. Starting with a single café in her hometown, Sarah grew the business into a nationwide brand with 25 locations, with plans to open ten more in the coming year

A cornerstone of EcoDelight’s success is its strong unique selling proposition: promoting sustainability at every level of its operations. This includes sourcing coffee beans exclusively from fair-trade certified farms, using biodegradable packaging and incentivising customers to use reusable cups through a popular loyalty rewards programme. Additionally, the café interiors feature educational displays about green farming and recycling practices. These efforts resonate particularly with millennials, who make up 65% of EcoDelight’s customer base and have helped build a loyal following in a competitive market

Corporate social responsibility (CSR) is at the heart of EcoDelight’s mission. The company donates 2% of its annual profits to environmental causes, such as reforestation projects and ocean clean-up initiatives. Employees are encouraged to participate in these initiatives through paid volunteering days. These efforts have not only contributed to a positive brand image but have also fostered community engagement. A recent survey found that 75% of customers are aware of EcoDelight’s CSR activities, and 80% stated that these efforts influence their decision to choose the brand over competitors

Sarah’s leadership has played a key role in the company’s growth. In the early years, her autocratic style allowed for quick decision-making and clear direction during the start-up phase. However, as the business grew, Sarah adopted a more democratic and situational leadership style to manage a larger and more diverse team. Employees have shared mixed feedback on her leadership, with many appreciating her consultative approach, while others sometimes feel decisions take too long. Insights from staff feedback are detailed in Table 2

Looking ahead, Sarah is considering introducing a range of organic snacks, including granola bars and vegan pastries, to complement the coffee offerings. Preliminary sales forecasts (Table 1) suggest that these snacks could significantly boost revenue, but they also highlight potential challenges, such as demand variability and increased ingredient costs. To make informed decisions, Sarah is exploring a more structured approach to sales forecasting, recognising its importance for managing cash flow and inventory

As EcoDelight continues to grow, operational challenges have emerged. Maintaining service quality across all locations has been difficult, with staff turnover reaching 25%, significantly higher than the industry average of 15%. Qualitative feedback from employees reveals that while many value the company’s ethical focus, others feel overburdened due to rapid expansion. Sarah is now considering implementing more robust training programmes and recruitment strategies to ensure that EcoDelight’s high standards of service are upheld across all locations

Table 1: Sales forecast for organic snacks (next six months)

Table 2: Employee feedback on Sarah's leadership

GreenCycle Ltd is a private limited company that makes high-quality, eco-friendly bicycles. The business started ten years ago and has become popular with environmentally conscious customers. GreenCycle sells its bicycles online and through independent retailers. Its mission is to promote sustainable transport while making strong, reliable bicycles

The company wants to become a leader in the sustainable transport market. To achieve this, GreenCycle has set several goals. These include increasing sales by 20% each year for the next three years, launching two new bicycle models every year and improving customer satisfaction by 15% within two years. The company believes that these goals will help it grow while staying true to its commitment to sustainability

Recently, GreenCycle has seen more demand for its bicycles, especially from younger customers. To keep up, the company is thinking about investing in a new production line or automating parts of its production process. These changes would increase the number of bicycles it can make but would require large investments. For example, a new production line would cost $450,100 but could increase production by 30%. Automation would cost $320,800 and increase production by 20%. Management must decide which option is best for the company

GreenCycle is also using sales forecasts to decide if these investments are worth it. The forecasts show that sales could increase significantly over the next five years. However, some people in the company are unsure about the forecasts because they rely heavily on past sales and assumptions about future demand

The management team must make careful decisions. The company’s investors, employees and customers are all watching closely, as these changes could have a big impact on GreenCycle’s future

Table 1: Business objectives

Table 2: Production and investment data

Graph 1: GreenCycle Ltd sales revenue growth forecast (five years)