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# Nonlinear Sales Forecasting

Discussion in 'Ask an Excel Question' started by Dokat, Apr 20, 2017.

1. ### DokatMember

Messages:
163
Hi,

I have a 52 week historical sales data for various price points. The relation between price and demand is non linear. When i ran a regression it returns low RSquare and high P value which indicate regressors are not predictive. Did anyone come across the same issue and work around to build predictive pricing model in Excel.

Thanks
2. ### HuiExcel NinjaStaff Member

Messages:
10,696
Is there a Monthly or Quarterly or other cycle that is more regular?
3. ### DokatMember

Messages:
163
no it is not based on historical data but unit sales at various price points. Thanks
4. ### r2c2Active Member

Messages:
119
Are you sure Price is the only variable in this scenario? Here is how I would approach the problem:
• Plot price vs. demand (unit sales) and inspect for any visible pattern.
• Exclude outliers
• If there is no specific pattern, repeat the exercise with
• price bands vs. sales
• price vs. sales split by time of sale (by weekday / month / weeknum / quarter etc. depending on your industry norm)
• Is there a mixture of patterns? (ie liner relationship up to certain price and then exponential / polynomial after that)
If you see no obvious pattern, validate your hypothesis that price determines demand. May be the relationship is weak or non-existent. Or it is masked by other variables not present in the data. So either include more columns or conclude that such a prediction is useless.

If you end up building such a model, share it with us.

all the best.