Forecasting the sales of precast concrete building products

Sales of precast concrete building products are influenced by the general demand for construction. This demand is subject to substantial fluctuations, caused by such diverse factors as capital spending by Government, the general strength of the economy, the demand for housing — which in turn reflects mortgage interest rates -and also by seasonal factors and weather. These are some of the difficulties associated with sales forecasting in the precast concrete industry. Sales forecasting is crucial managerial practice and its accuracy is vital for any company's business survival. A survey of the current forecasting and planning practices in the industry concluded that forecasting, especially for major product groups, is fairly basic and not reliable. Against this background, a forecasting model has been developed to analyse historical data and forecast demand for 12 months ahead. Two forecasting methods were applied to historical data of 12 groups of products of a major manufacturer. The results of the forecasting model were encouraging and more accurate than the manufacturer's existing forecasting system. The authors interviewed the firm's marketing and sales staff to identify the advantages and disadvantages of the forecasting system and identify the factors which affect sales and forecasting in general. Some tangible indication of the practical use of this work is the support given to this research project by staff of this company, at all levels. The work described in this paper is part of a more general computerized capacity planning system for the precast industry. This would be suitable for major companies, most of whom produce a large number of different products in a number of different manufacturing plants dispersed throughout the UK.