Refer to Table 1.1. Calculate for quarter 1, 2023, the seasonal variation.

Mark scheme

Marking points from the official mark scheme (May/June 2024). The mark or mark type is shown in brackets.

1. 3(a) Seasonal variation = 16 – 23.75 = – 7.75 OR – 7750 OR (7.75) (1)
2. Note: No mark for 7.75 OR 7750.
3. 3(b) Correct answer: 25 OR 25 000 [3]
4. Correct method but no correct final answer OR Calculation of 8 period moving total: 98+102 = 200 OR 98 000 + 102 000 = 200 000 OR 200 / 8 OR 200 000 / 8 [2]
5. Note: 200 OR 200 000 written on its own is 0 marks Accurate method must be shown
6. Calculation of one or more correct 4 period moving totals: 20 + 16 + 27 + 35 = 98 OR/AND 16 + 27 + 35 + 24 = 102 OR 4 period MA = 8 period moving total / 8 OR 102 / 4 = 25.5 [1]
7. Knowledge of correct method [1]
8. Sales forecasting involves making a prediction of future sales.
9. Time series analysis is a method of forecasting based on extrapolation from past data.
10. Benefits of sales forecasting include: Contribution to workforce planning
11. Planning purchase of resources
12. Greater accuracy in cash flow forecasting
13. Aids operational decisions such as need to increase capacity
14. Aids decisions about pricing
15. Drawbacks of sales forecasting include: Inaccuracy
16. Dynamic market
17. Doesn't take into account qualitative factors
18. Past can't predict the future
19. Moving averages are based on past data
20. Reference to current capacity utilisation of over 90%.
21. Need for forecast of sales if start to export to country D.
22. Role of market reports and market research in forecasting.
23. Identifying likely demand for tofu and Sosoy Ice Cream.
24. Identifying employees needed in factory and decision about employment contracts to use.
25. Inability to control the weather.
26. Helps ensure efficient use of labour and machinery helping to control costs of production AN and therefore increase profit L2AN
27. Contributes to creating cash flow forecast which will help ensure that SF has sufficient finance in place to deal with future needs AN
28. Sales forecasts for entering country D will help evaluate whether break-even can be achieved AN and therefore whether exports are likely to be successful L2AN
29. Because the market is dynamic it could lead to misallocation of resources such as having too many peripheral employees in the factory AN which would lead to increased costs L2AN
30. Using 4 period moving average fits the data well as there are clear seasonal variations ensuring that the technique is more likely to give reliable results.
31. Unexpected changes in the external environment such as entry of a new competitor will result in the predictions being incorrect and therefore less useful in making the best decisions.
32. TSA relies on future events behaving as in the past so may not be reliable as markets are dynamic.
33. May be advisable to introduce an element of probability to the forecasts – what if analysis?
34. The longer the time frame the less useful the forecast is because there are more likely to be external events that impact the forecast.
35. Using simple moving averages and a line of best fit may be too simplistic.
36. Usefulness is limited if managers don't use the sales forecast to make decisions.
37. Should be used in conjunction with qualitative data and current market data to improve usefulness.