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    Forecasting sales with a moving average process

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    Week 2 Problem
    Sales Forecasting

    NOTE: It is expected that this problem will be completed using an Excel spreadsheet using formulas. Please see the Excel Tutorial that is available under the course home tab.

    The Schonlind Company has gathered information regarding past sales:

    Year Sales
    1999 $300,000
    2000 225,000
    2001 325,000
    2002 650,000
    2003 540,000
    2004 675,000
    2005 825,000

    1. Predict the sales for 2006 using the moving average method.
    2. You noticed a sudden jump in sales in 2002. After inquiring about this jump, you were told that there was a one-time sale for $200,000 in that year that is not likely to be repeated. What revision, if any, would you make in the sales information used for projection?
    3. If you revised you historical sales to be used to project 2006 sales, recalculate your projection using the moving average method.
    4. Which projection (question 1 or question 3) do you feel is more representative of the Schonlind Company's historical sales? Why?

    Please complete the remaining questions using the revised historical data.
    5. Predict the sales for 2006 using exponential smoothing.
    6. Predict the sales for 2006 using a trend line technique using. (GROWTH function in Excel).
    7. Predict the sales for 2006 using a graphing technique.
    8. It has been suggested that sales for the company may be connected to disposal income. Using the information below regarding historical disposable income, predict the sale for 2006 using regression analysis if a reliable prediction for disposable income for 2006 is $35,430.
    Year Disposable Income
    1999 $24,190
    2000 26,194
    2001 27,466
    2002 29,994
    2003 33,467
    2004 36,348
    2005 35,700

    9. Which method do you think provides the most realistic sales projections for 2006? Why?

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    Solution Summary

    The following using a moving average process implemented in Excel to make a forecast of sales.