4.3 Sales forecasting questions for IB Business Management

Dommel Cycles

[1] Dommel Cycles (DC) is a private limited company in Utrecht, the Netherlands, that designs and assembles electric cargo bikes. Its customers are mainly young families and small delivery businesses. DC’s single assembly line can produce a maximum of 8 000 bikes a year.

[2] Sales have grown every year since 2021 (Table 1). Lotte Bosman, DC’s marketing director, has forecast sales of 9 500 bikes for 2026. Her forecast extends the recent trend and assumes that the Dutch government will introduce a subsidy of €1 000 for every household that buys a cargo bike. The subsidy has been proposed but has not yet been approved by parliament.

[3] Based on Lotte’s forecast, the operations director, Joost Bakker, wants to build a second assembly line costing €2.4 million, financed by a bank loan. The finance director, Lieke Jansen, is cautious. She points out that two Chinese manufacturers have entered the Dutch market with cheaper models, and that DC’s forecast for 2025 was 8 % higher than actual sales.

Table 1: DC’s sales of cargo bikes (units), 2021–2026

Wai Bula Refill (WBR)

Read the resources and answer the questions that follow.

Wai Bula Refill (WBR) is a social enterprise in Nadi, Fiji, founded in 2014 by Losana Tuilau. Wai means water in Fijian. WBR installs stations that sell filtered drinking water by the litre at resorts, ferry terminals and markets, so that tourists and local people can refill bottles instead of buying plastic ones. Each station is run by a woman from a nearby village, who earns a commission on sales. WBR uses part of its profit to repair and build water systems in villages. It has 34 stations, mainly on the main island, Viti Levu.

Image: a turquoise refill station shaped like a wave, standing under palm trees beside a resort pool. A tourist fills a steel bottle while a Fijian woman in a floral dress smiles behind the counter. Sign: “Wai Bula – refill, not landfill. FJD 1 per litre”.

Resource 1 – News article from *Fiji Business Today*

Plastic ban could make refill a big business

The government has announced plans to ban the sale of single-use plastic water bottles at hotels and resorts from 2027, although the date may change after objections from bottlers. Tourism, which collapsed during the COVID-19 pandemic, has fully recovered. The tourism authority expects arrivals to reach 1.15 million by 2028, but airline analysts warn that limited flight capacity could keep numbers close to 1 million.

Table 1: Visitor arrivals and WBR sales

FJD = Fiji dollars.

Resource 2 – Social media posts from a visitor from New Zealand

Loved Wai Bula! Filled my bottle at the resort, the ferry and the market for a dollar a litre. Mere at the resort station told us about the water tank her village built with WBR’s profits. Bula vinaka! [1/2]

Only problem: no stations on the smaller islands we visited, so we were back to buying plastic bottles. Please expand! [2/2]

Resource 3 – Internal email from Losana Tuilau to WBR’s board

From: Losana Tuilau, Founder

To: Board of directors

Subject: Planning for 2026–2028

I propose that we open 20 new stations over the next three years, at about FJD 18 000 each, including eight on the outer islands. Our bank needs a sales forecast before it will lend.

Islands Resorts Group, an international hotel chain with 11 resorts in Fiji, has also offered to buy 20 stations for its own resorts, branded with its name, and pay WBR a management fee. It would not want WBR stations in competing resorts nearby.

Cyclone season remains a risk: in 2016 a cyclone closed half our stations for six weeks.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – Station economics (average station, 2025)

Resource 5 – Survey of resort managers (45 replies)

Resource 6 – Interview with Mere, a WBR station operator

“My commission pays my children’s school fees. On a busy resort day I sell 80 litres; when the cruise ships come to the ferry station I can sell 200. But in February, when there are cyclone warnings, sometimes I sell nothing all week. On my home island there are no stations and the village has no tap – we would love one, even if tourists are fewer there.”

Curry Leaf Bistro (CLB) runs an Indian-fusion restaurant in Melbourne, Australia, with 120 seats. Each month it spends between AUD 1 000 and AUD 8 000 on social media advertising. The manager, Rohan Kapoor, has plotted monthly advertising spend against the number of covers (meals served) for the last eight months and drawn a line of best fit (Figure 1). The equation of the line is:

Covers = 2 000 + 430 × advertising spend (AUD 000)

CLB is open 30 days a month and serves two sittings each evening.

Ondo Fashion House (OFH) is a fast-fashion retailer with 11 stores in Lagos and Abuja, Nigeria. Its designs follow styles worn by Afrobeats artists on social media, and new ranges reach stores within weeks. OFH orders fabric from suppliers in China six months in advance, based on a sales forecast prepared by its buying team using the previous year’s sales of each product line. In 2025 two of its four new ranges sold out within a week, while the other two were sold at heavy discounts.

Explain two limitations for OFH of using sales forecasting to plan its fabric orders.

Yuki Dairy is a family business in Hokkaido, Japan, that makes premium ice cream from the milk of its own herd of 90 cows. Sales are about four times higher in July and August than in January. The ice cream has a shelf life of nine months, and the business employs seasonal workers each summer. The owner, Kenta Morimoto, is planning to ask the bank for a ¥15 million loan to buy a second freezer warehouse.

Explain two benefits to Yuki Dairy of producing a sales forecast.

Lanna Trails (LT) is a tour operator in Chiang Mai, Thailand, that sells guided trekking and cooking tours to foreign visitors. Each October it forecasts the number of tour bookings for the following year and uses the forecast to hire guides and to book minibuses. In 2025 one of LT’s largest source countries introduced stricter rules on travel insurance for trips abroad, and severe flooding closed several trekking routes for two months.

Table 1: LT’s forecast and actual tour bookings, 2023–2025