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Forecasting sales with a moving average process

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AC556
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

Required:
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.

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See Also This Related BrainMass Solution

Operations Management Multiple Choice: Forecasting, Virtual Reality Technology, Product Life Cycle.

See attached file for clarity.

1. (TCO 5) What is the forecast for May, based on a weighted moving average applied to the following past-demand data and using the weights 4, 3, 2 (largest weight is for most recent data)?
Nov. Dec. Jan. Feb. Mar. April
37 36 40 42 47 43

42.5
33.6
40.3
44.1
39.22

2. (TCO 5) Jim's department at a local department store has tracked the sales of a product over the last ten weeks exponential smoothing with an alpha of 0.4. In January he forecasted $150,000 in sales and achieved $155,000 is sales. Using this same forecasting model, estimate Jim's February sales.
$152,000
$155,000
$157,000
$305,000

3. (TCO 5) What is the approximate forecast for May using a four-month moving average?
Nov. Dec. Jan. Feb. Mar. April
39 36 40 42 48 46

32
44
48
40

1. (TCO 7) Which of these statements best describes virtual reality technology?
It is used to monitor and control a physical process.
It is the use of special computer programs to direct and control manufacturing equipment.
It is the ability to depict objects in three-dimensional form.
It is a visual form of communication in which images substitute for the real thing.

2. (TCO 7) Which of the following helps operations managers focus on the critical few and not the trivial many?
value analysis
value engineering
financial analysis
product-by-value analysis
product cost justification

3. (TCO 7) Which of the following moments of truth exemplifies the customer's standard expectations?
Your advisor made you wait, even though you had an appointment
You had to visit more than once to reach your academic advisor
Your advisor was competent, helpful, and understanding
Your advisor failed to keep her appointment with you

4. (TCO 7) In which stage of the product life cycle is does cost control need to be improved?
introduction
growth
maturity
decline

5. (TCO 7) The specific components inputted into the third house in the house of quality are satisfied by
the quality plan
customer requirements
design characteristics
the production process

6. (TCO 5) The data points used in time-series forecasting
are spaced randomly
are never known
have variable spacing
are evenly spaced
can not be determined

7. (TCO 5) Which of the following is not a step in the forecasting process?
determine the use of the forecast
eliminate any assumptions
determine the time horizon
select a forecasting model(s)
validate and implement the results

8. (TCO 6) Which of these statements best describes computer-aided manufacturing (CAM)?
It is the interactive use of computers to design a product and prepare engineering documentation.
The use of special computer programs to direct and control manufacturing equipment.
It is the ability to depict objects in three-dimensional form.
It is a visual form of communication in which images substitute for the real thing.

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