DESIGN AND IMPLEMENTATION OF A SALES FORECASTING SYSTEM USING LINEAR REGRESSION MODEL

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ABSTRACT

The research work “Sales -Forecasting System”  is a sales system using ‘point of sales ( POS ) technology to achieve its sales, accounting and linear regression model for sales forecast included in the system is the supplier registration and management, product registration and management, user management, customer management sales report, receipt printing and sales forecasting. This work was done as a result to solve the problems usually encountered in most companies. The Employee Management System was achieved using two programming environment: PHP and MYSQL, with php as front-end and mysql as the backend database. The system can be entered using a username and password. It is accessible either by an administrator or staffs. The interface is very user-friendly. protected for personal use and the data processing is very fast.                   

CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study

Forecasting is the process of making predictions of the future based on past and present data and analysis of trends. Sales forecasting is the ability to forecast future sales base on past months sales. Sales forecasting system uses several proven models such as qualitative versus quantitative model, average approach model, casual /econometrics forecasting model, linear regression model etc., these model are proven models use over the years by different financial institutes.

Effective planning, in short and long term, depends on demand forecasts for the company products (Heizer, J. (2009). Good forecasts are crucial to all business aspects: Demand forecast is the only useful data until the actual demand is known. Therefore, demand forecasts guide decisions in many areas: human resources, capacity management and supply chain.

Forecasting is fundamental in any planning effort (Chase, R. (2014). In the short term, forecast is needed to predict the material, products, services or other resources to respond to changes in demand. A forecast allows adjusting schedules and varying labor and materials. In the long run, it is required to predict the basis for strategic changes, such as the development of new markets, new products or services and expand or build new facilities.

Sales and operations planning is a process that helps to provide better customer service, handling of lower inventories, offer shorter delivery time to customers, stabilize production rates and facilitate management business. It does not matter that, owing to changing markets, the chemicals supplying enterprises have troubles with operations scheduling and inventories management; they are a fundamental component in the national economy.

The chemicals supplying enterprises demands are highly variable in volume and presentation; their customers vary from a small hardware store, up to an auto assembler factory, passing through: pharmaceutical, chemical, petrochemical and polymer companies, paints and varnishes manufacturers, etc. In some companies, they handled up to 500 different materials and have up to 1000 clients; all of this complicates their operations planning.

Because of the above chemicals supplying enterprises problems, a system to forecast their sales with the best possible accuracy is proposed. The system, (algorithm and software) for the yearly or monthly sales prediction, calculates a possible sales number for each product using five techniques, evaluates the error of each of them and selects the lowest error technique; from which the sales forecast for each product is proposed. The goal is to make effective plans in order to properly satisfy the customer demands.

According to Thompson, (2014) the key to a most efficient Supply Chain is forecast, which very much depends on people, process, and technology. In order to gain participation from Sales, we need to

1) Educate Sales people so that they understand why forecasting is essential,

2) Developing a well-structured forecasting process,

3) Clearly define roles and responsibilities, and

4) Make access to systems easy to use to facilitate their participation.

1.2 Statement Of Problem

This research work was undertaken to uncover some of the problems with conventional sales forecasting management systems. Where accountant has to calculate using a specific sales model formula in forecasting on a regular basis. Using these conventional method pose lots of constraint on sales forecasting as it takes lots of time forecasting using which ever model is adopted by the sales manager or accountant or financial adviser.

1.3 Aim Of The Study

The aim of this study is to design and implement of a sale forecasting system using linear regression model.

1.4 Objective Of  The Study

In view of the problems mentioned above, this project is aimed at implementing a sales forecasting system using linear regression model and with an added POS system.

  1. Manage and forecast sales
  2. Automate customer, product, supplier management on the system
  3. Manage system access and roles on the system
  4. Manage every users of the system

1.5 Significance Of The Study

Projects provide a flexible framework for engaging students in exploring curricular topics and developing important 21st century skills, such as communication, teamwork, and technology skills. In addition, students are motivated by the fun and creative format and the opportunity to make new friends around the world.

In this research work will provide a reliable way of handling sales and sales forecasting using linear regression model to forecast sales in and financial institution. Furthermore, it will aids structural document representation and eliminates the tedium of performing monotonous transaction. This research will also contribute to existing literature in this area and will serve as a guild or blueprint for an undergraduate student. Sale forecasting system help organization to Predict achievable sales revenue, efficiently allocate resources, Plan for future growth etc. As your business grows, sales forecasts continue to be an important measurement of a company’s health. Wall Street measures the success of a company by how well it meets its quarterly sales forecasts and the overall effect of accurate sales forecasting is a business that runs more efficiently, saving money on excess inventory, increasing profit and serving its customers better.

 

1.6 Scope Of The Study

This research work is to develop a system capable of managing sales on a daily basis using a “Point of Sales (POS)” method and also, being able to forecast sales using linear regression model.

The system will not incorporate in its development all the models use for sales forecasting but will focus only on the aforementioned models and functionalities. The system will not be responsible for any loss of data if its environment (network/system installed on) is corrupt.

This research work “design and implementation of a “Sales Forecasting System” will be a web-based application and will be implemented on a relational database system (MySQL), Html (hypertext markup language), css (cascading style sheet) and Jquery will be used to design the web-user interface, php (hypertext preprocessor) will be used as the serve- side script language to link the interface and the database.

 

1.7 Limitation Of Study

Usually, every work has some limitations and this study is not exempted.

The two major limitations of this study are the high programming technique as well as financial constraints. The high programming technique constraint in PHP, JQUERY and MYSQL prevents the researcher to have an in depth study and analysis on the subject matter. While the issue of financial constraint limits the frequency of investigation to/from the institution toward gathering the necessary information relevant for the study.

1.8 Definition Of Terms

POS – Point of sale

HTML CODE- HTML stands for Hyper Text Markup Language. It is a type of computer language that is primarily used for files that are posted on the internet and viewed by web browsers. HTML files can also be sent via email.

Markup language – A markup language is a combination of words and symbols which give instructions on how a document should appear. For example, a tag may indicate that words are written in italics or bold type.

Web browser – A Web browser is a software program that interprets the coding language of the World Wide Web in graphic form, displaying the translation rather than the coding. This allows anyone to “browse the Web” by simple point and click navigation, bypassing the need to know commands used in software languages.

File extension – A file extension is the suffix at the end of a filename that tells a computer, and the computer user, which program is needed to open the file. Also called a filename extension, this suffix preceded by at least one period, is generally one to five characters long but the norm is usually three characters in length.

Email – Email, also sometimes written as e-mail, is simply the shortened form of electronic mail, a protocol for receiving, sending, and storing electronic messages. Email has gained popularity with the spread of the Internet. In many cases, email has become the preferred method of communication.

TCP/IP – This often used but little understood set of operations stands for Transmission Control Protocol/Internet Protocol. TCP/IP is the combination of the two and describes the set of protocols that allows hosts to connect to the Internet. In actuality, TCP/IP is a combination of more than those two protocols, but the TCP and IP parts of TCP/IP are the main ones and the only ones to become part of the acronym that describes the operations involved

TEXT FILE – A text file is a computer file that stores a typed document as a series of alphanumeric characters, usually without visual formatting information. The content may be a personal note or list, a journal or newspaper article, a book, or any other text that can be rendered accurately in typewritten form.

Hyper Link –   A hyperlink is a graphic or a piece of text in an Internet document that can connect readers to another webpage, or another portion of a document. Web users will usually find at least one hyperlink on every webpage. The simplest form of these is called embedded text or an embedded link.

www – acronym for  World Wide Web

1.9        Chapter Layout

This section  was  put in place to explain what each chapter does, chapter one introduces the project to the reader by explaining the problems the project is supposed to solve, objective of the study and research justification is to describe to the reader the purpose and the  importance of  researching on this topic, research methodology is all about the method used in implementing the research work, scope and limitation describes  the boundary of the research work and where the project work can be put into use.

Chapter two deals with the literature review and state-of-the-art. This chapter discusses literature review, what people have published related to this research work and their shortcoming, how this present research can improve their shortcomings.

Chapter three deals with the system design methodology i.e. collection of tools methods and practices for achieving a task; the requirement specification states the expectation of the system analysis, and design which is the blueprint of what the system would carry out.

Chapter four has to do with the implementation, system testing strategies, target computer system requirement, software maintenance etc.

Chapter five discusses the recommendations and conclusion part of the research work and how this work can be applied to the problem domain.

         
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