Forecasting Monthly Sales on a Month by Month Basis
I am trying to develop a model using Excel (data table perhaps) that can be used to forecast monthly sales on a month-by-month basis based on previous monthly data starting with January of year 7. The sales history is attached.
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Dear Student:
Please open the attached Excel file and continue to read the following additional remarks.
There are several forecasting methods. It depends on the situation, which would be the best method to use, as each case is different, and often doing forecasts using several methods would be advisable. The best forecasting method could be verified using MAD (mean absolute deviation), but to calculate this we would need the forecasted sales from years 1 to 6, which are not given in the assignment, as in this case the data given in the assignment includes only actual monthly sales numbers. To increase the accuracy of our forecast, we would want to use a more ...
Solution Summary
This solution opens with a short discussion on available forecasting methods and chooses the best methods based on information and data given in the problem. The solution then shows detailed computations on forecasting monthly sales using the trend projection and the seasonal index method, using Excel.