The Analysis ToolPak in Excel Sales Forecasting

The Analysis ToolPak in Excel sales forecasting figures out what's going on with your data without your having to enter formulas. Excel's Analysis ToolPak has three useful tools for directly forecasting — Moving Average, Exponential Smoothing, and Regression — along with others that can help. Here's a list of some tools that are part of the Analysis ToolPak:































ToolWhat It Does
ANOVAThere are actually three different ANOVA tools. None is
specifically useful for forecasting, but each of the tools can help
you understand the data set that underlies your forecast. The ANOVA
tools help you distinguish among samples — for example, do
people who live in Tennessee like a particular brand of car better
than those who live in Vermont?
CorrelationThis tool is an important one, regardless of the method you use
to do your forecast. If you have more than one variable, it can
tell you how strongly the two variables are related (plus or minus
1.0 is strong, 0.0 means no relationship). If you have only one
variable, it can tell you how strongly one time period is related
to another.
Descriptive StatisticsUse the Descriptive Statistics tool to get a handle on things
like the average and the standard deviation of your data.
Understanding these basic statistics is important so you know
what's going on with your forecasts.
Exponential SmoothingI hate this tool's name — it sounds ominous and
intimidating, which the tool is not. When you have just one
variable — something such as sales revenue or unit sales
— you look to a previous actual value to predict the next one
(maybe the previous month, or the same month in the previous year).
All this tool does is adjust the next forecast by using the error
in the prior forecast.
Moving AverageA moving average shows the average of results over time. The
first one might be the average for January, February, and March;
the second would then be the average for February, March, and
April; and so on. This method of forecasting tends to focus on the
signal (what's really going on in the baseline) and to
minimize the noise (random fluctuations in the
baseline).
RegressionRegression is closely related to correlation. Use this tool to
forecast one variable (such as sales) from another (such as date or
advertising). It gives you a couple of numbers to use in an
equation, like Sales = 50000 + (10 * Date).



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