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Design And Implementation Of A Sales Forecasting System Using Linear Regression Model


Project topic for Computer Science department

CHAPTER ONE

Introduction

1.1 Background of the Study

The research work on Sales-Forecasting System is a sales system using linear regression model to forecast sales of products in an organization. It can be highly beneficial for companies to develop a forecast of the future values of some important metrics, such as demand for its product or variables that describe the economic climate. There are different methods of making forecasts, but they all fall into two categories: causal methods and time-series methods, Andrew Gellert (2013). Linear regression is a time-series method that uses basic statistics to project future values for a target variable, Andrew Gellert (2013). All organizations, big or small, have at their disposal men, machines, money and materials, the supply of which may be limited, Gupta and Hiza (2008). If the supply of these resources were unlimited, the need for management tool like linear programming would not arise at all. Supply of resources being limited, the management must find the best allocation of its resources in-order to maximize the profit or minimize the loss or utilize the production capacity to the maximum. However, this involves a number of problems which can be overcome by quantitative methods, particularly the linear programming.

This study focuses on the production capacity of Nigerian Breweries Plc. It would go a long way in determining the best production output of a particular product. Since, the company is known to engage in the production of variety of products, this method (linear regression approach) would alleviate the problem. In this case, linear regression is the best choice to be adapted. To compliment this, linear regression deals with the forecasting of sales in an organization.         

Breweries was originally owned and still owned by the Heineken Brouwerijen B.V., Distilled Trading International B.V., and Nigerian Citizens. It was established in 1946, is the pioneer and largest Brewery Company in Nigeria.  Its first bottle of beer, STAR Lager, rolled off the bottling lines of its Lagos Brewery in June 1949. Other breweries were subsequently commissioned by the company, including Aba Brewery in 1957, Kaduna Brewery in 1963, and Ibadan Brewery in 1982. In September 1993, the company acquired its fifth brewery, sited at Ama in Enugu State.

Ama Brewery is the largest brewery in Nigeria and of the most modern worldwide. Operations at Enugu brewery were discontinued in 2004, while the company acquired a malting plant in Aba, in 2008. In October 2011, Nigerian Breweries acquired majority equity interests in Sona System Associates Business Management Limited (Sona System) and Life-Breweries Limited from Heineken N.V. This followed five breweries in Nigeria from Sona Group in January 2011. Sona Systems’ two breweries in Ota and Kaduna, and Life-Breweries in Onitsha have now become part of Nigerian Breweries Plc.

1.2    Statementof the Problem

The investigation done revealed that workers manually do the record keeping for forecasting. The manual system is outdated in terms of speed of processing and accuracy. This results into wastage of time and inefficiency in production.

1.3    Motivation

The motivation behind the adoption of this research work is because of the variation in sales result made by the company. The sales output tends to be low and inaccurate.

1.4    Aims and Objectives

The aim of this study is the design and implementation of a sales forecasting system using linear regression model.

The specific objectives are:

  • To design a sales forecasting system using linear regression model.
  • To implement a sales forecasting system using linear regression model.

1.5    Significance of the Study

The study will be beneficial to both the management and the staff of the company. Also shareholders would benefit from it. The Management would experience a tremendous increase in the profit level since the sales of a product can be forecast at ease. The company will enjoy the attraction of investor as the company’s market share will rise. The staff or employees of the company will enjoy an increase in their salary structure and other benefits or incentives attach to employees laws. Shareholders will experience increase in their share dividend.

1.6    Organization of the Work

The work is segmented into five chapters: Chapter one contains the introduction of the research, background of the study, statement of problem, motivation, aims and objectives, significance of the study, organization of work and the definition of terms. Chapter two contains the literature review. Chapter three contains research methodology: design consideration and design architecture. Chapter four contains the implementation and evaluation: system hardware requirement, system software requirement, data source, implementation procedure, algorithm, sample implementation input snapshot, sample implementation output snapshot, evaluation results, discussion of results. Chapter five contains discussion and conclusion.

1.7    Definition of Terms

Amiss: Is inappropriate or out of place.

Contingency: Is a future event or circumstance which is possible but cannot be predicted with certainty.

Chronological: A record of events following the order in which they occurred.

Linear Regression: Is a statistical analysis that shows the relationship between two variables.

Methodology: Is a system of methods used in a particular area of study.

Minimize: Is to reduce something to the least possible amount.

Maximize: Is to increase to the greatest possible amount or degree.

Minimum: Is the lowest known or lowest possible number, quantity or degree.

Optimistic: Is hopeful and confident about the future.

Product: Is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. In manufacturing, products are bought as raw materials and sold as finished goods.

Prediction: Is a statement about an uncertain event.

Pragmatism: Is a philosophical movement that includes those who claim that an ideology or proposition is true if it works satisfactorily, that the meaning of a proposition is to be found in the practical consequences of accepting it and that unpractical ideas are to be rejected.

Quantitative: It refers to a type of information based in quantities or else quantifiable data (objective properties) as opposed to qualitative information which deals with apparent qualities (subjective properties).

Sales: - Is the act of taking goods or service which has value and contributes to the utility of individual to the market.

Variable: It is a characteristic, number or quantity that increases or decreases over time, or takes different values in different situations.


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