What if there is no prior estimation?

BELOW OPTIMUM LESS SALES

ABOVE OPTIMUM EXCESS COST

METHODS OF DETERMINATION OF MANPOWER

Workload Approach

Sales Potential Approach

Incremental Approach

Work-load approach It is based on the assumption that all sales personnel should bear equal load of workFor this the management has to calculate the total amount of work load for the entire marketIt is then divided according to the work handled by an individual sales personIn this way, the approximate number of manpower can be determined

Illustration

Classify customers

‘x’(large accounts)= 200‘y’(medium accounts)= 400‘z’(small accounts)= 1000

Total= 1600 in number

Now settle the length of time per sales call and required call frequency for each class of customers

X= 60 min. with 52calls/year= 52 hrs.Y= 30 min. with 24calls/year= 12 hrs.Z= 15 min. with 12calls/year= 3hrs.

Now total workload can be calculated as follows-

52 x 200 = 1040012 x 400 = 48003 x 1000 = 3000

TOTAL= 18,200

Now if the company decides 40 hrs. of work per week for 48 weeks, then total no. of available hrs for the year would be

40 x 48 = 1920 hrs.

Therefore, total no. of sales person required is

= Total hrs required/Total hrs. available

= 18,200/1920

= 9 sales person approximately

Sales potential method It is based on the assumption that one sales personnel

unit depends upon the performance of the given activities in the job description

The management determines the sales job description according to the average performance by an average sales person

EXAMPLE AVERAGE EXPECTED SALES BY 1

SALESPERSON=100 UNITS

TARGET SALES VOLUME=10000

EXPECTED PROPORTION OF OPTIMUM SALES FORCE WHO QUIT OR UNDERPERFORM=10%=0.10

NO. OF SALESPERSON TO BE RECRUITED

=(10000/100)x(1+0.10)

=110

FORMULA

.N=(S/P)(1 + T)

N= Number of sales personnel unitS= forecasted sales volumeP= estimated sales productivity of one sales personnel unitT = allowance for rate of sales force turnover

Incremental Method It is the method in determining the sales force size

It is based on two important information which are-

1. Incremental revenue

2. Incremental cost

When incremental revenue exceeds the incremental cost, then net profit will increase due to additional sales personnel

EXAMPLE

COST OF ADDITIONAL UNITS= 10000 S.P. OF ADDITIONAL UNITS=12000 COST FOR 1 SALESPERSON=20

MAXIMUM NO. OF SALESPERSON TO BE RECRUITED

=(12000-10000)/20=100