PRACTICAL APPLICATIONS
OF FORECAST FUNCTION IN SALES IN MS-EXCEL
Like I said earlier, the FORECAST function can be applied in
various field. I will illustrate how the function is used to predict Sales and
how to call up the function.
QUESTION:
The table shown in the spreadsheet is a Sales Record of
Joe-links Services for the year 2016. Use the data in the figure below to
predict the sales for the month of August.
SOLUTION TO THE
FORECAST QUESTION
Prepare your worksheet as shown above and type the following
formula in cell C10:
=
FORECAST(B10,C3:C9,B3:B9) press Enter.
Excel does the underground calculation and produces a value 17885.71429 as the result.
HOW TO USE THE TREND
FUNCTION TO PREDICT FUTURE SALES IN EXCEL
A sales trend determines whether sales will continue to
increase or decrease and how fast (i.e. rate of increase or decrease). The
TREND function is used to predict the results for the next several months even
if you don’t have reliable results from the previous months, unlike the
FORECAST function which is used to determine for the immediate next month.
The function returns values along a linear trend. Fits a
straight line (using the method of least squares) to the arrays known_y's and known_x's. Returns the y-values
along that line for the array of new_x's
that you specify.
The TREND function Syntax is:
TREND(known_y's,
[known_x's], [new_x's], [const])
The TREND function syntax has the following arguments:
• Known_y's (required) - The set of y-values you already know in the relationship y = mx + b.
If the array known_y's is in a single column, then each column of known_x's is interpreted as a separate variable.
If the array known_y's is in a single row, then each row of known_x's is interpreted as a separate variable.
• Known_x's (required) - An optional set of x-values that you may already know in the relationship y = mx + b.
The array known_x's can include one or more sets of variables. If only one variable is used, known_y's and known_x's can be ranges of any shape, as long as they have equal dimensions. If more than one variable is used, known_y's must be a vector (that is, a range with a height of one row or a width of one column).
If known_x's is omitted, it is assumed to be the array {1,2,3,...} that is the same size as known_y's.
• New_x's (required) - New x-values for which you want TREND to return corresponding y-values.
New_x's must include a column (or row) for each independent variable, just as known_x's does. So, if known_y's is in a single column, known_x's and new_x's must have the same number of columns. If known_y's is in a single row, known_x's and new_x's must have the same number of rows.
If you omit new_x's, it is assumed to be the same as known_x's.
If you omit both known_x's and new_x's, they are assumed to be the array {1,2,3,...} that is the same size as known_y's.
• Const (optional) - A logical value specifying whether to force the constant b to equal 0.
If const is TRUE or omitted, b is calculated normally.
If const is FALSE, b is set equal to 0 (zero), and the m-values are adjusted so that y = mx.
NOTES:
• You can use TREND for polynomial curve fitting by regressing against the same variable raised to different powers. For example, suppose column A contains y-values and column B contains x-values. You can enter x^2 in column C, x^3 in column D, and so on, and then regress columns B through D against column A.
• Formulas that return arrays must be entered as array formulas.
• In Excel Web App you cannot create array formulas.
• When entering an array constant for an argument such as known_x's, use commas to separate values in the same row and semicolons to separate rows.
PRACTICAL APPLICATION
OF TREND FUNCTION IN SALES
The TREND function is more complicated than the FORECAST
function. I will use a simple case of a sales record to illustrate the
application of the TREND function.
QUESTION:
The table shown in the spreadsheet is a Sales Record of
Joe-links Services for the year 2016. Use the data in the figure below to
predict the sales for the months of September to December.
SOLUTION TO THE TREND
QUESTION
Prepare your worksheet as shown above and type the following
formula in cell C11:
= TREND(C3:C10,B3:B10,B11)
press Enter.
Use the fill handle to get the values for the subsequent
months.
Excel does the underground calculation and returns a set of values
in the appropriate cells as shown below.
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