A-LevelBusiness StudiesStrategic management9609/31 · May/June 2023 · Q316 Marks

Using the data in Table 1.1, calculate the seasonal variation for 2022 Q2 (X).

(a)Using the data in Table 1.1, calculate the seasonal variation for 2022 Q2 (X).[2]
(b)Using the data in Table 1.1, calculate the forecast revenue for 2023 Q3 (Y).[2]
(c)Evaluate the importance to WP's business planning of using sales forecasts based on time series analysis.[12]

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

[1] SV = Revenue in Q2 – Trend = seasonal variation
[1] 1.5 – 1.588
[2] = –0.088 OR –88 000
[1] 0.088 OR 88 000
[1] Forecast revenue = forecast trend plus average seasonal variation for that quarter
[1] 1.755m + (–0.25)
[2] = 1.505 OR 1 505 000
Components of forecasting using time series analysis (TSA): moving average, trend, seasonal variations, random events.
Elements of business planning: financial forecasts, marketing mix, workforce planning and operations.
Highly seasonal nature of WP sales, sales are highest in Q1 and lowest in Q3.
Possible new product range of outdoor play equipment.
Skilled employees will take time to recruit and train.
No real competitor threat to impact sales trends.
Possible effects of new government policies will impact sales trends.
TSA is a quantitative technique and provides a more scientific approach to forecasting and is therefore useful when making decisions about how many employees are needed for production AN to ensure that future customer needs are met L2 AN
As skilled employees are used by WP it will take time to recruit and train employees so WP needs effective workforce planning otherwise WP will not be able to meet increasing demand AN and this will reduce future profits L2AN.
TSA takes account of seasonal variations and is therefore relevant for planning where there is a regular fluctuation in demand AN
Sales prediction enables planning inventory holding which will delay cash outflows for purchasing inventory AN and therefore improve liquidity L2AN.
All forecasting may be inaccurate if external or internal environment changes.
TSA very important for forecasting sales for WP as sales vary seasonally.
TSA very important for planning production and inventory for WP to maximise efficiency on operations.
Must be able to accurately turn forecasts into resource planning.
Other forecasting methods more appropriate for other aspects of business planning e.g. market research for new product range sales.
secondary research (reports) for possible effects of new government policies.
SWOT, blue ocean, for corporate planning.