Problem 1
Problem 1 (Note Use sheet called sales)
Compute the forecast of the given sales projections (quarterly) using the following forecasting methods:
a.) 3 month moving average forecast
b.) 5 month moving average forecast
c.) weighted moving average forecast with the given weights 0.5 (most recent), 0.3, and 0.2
d.) exponential smoothing with an alpha weight of .75
Compute the Mean Absolute Deviation/E
or (MAD/MAE) for each forecasting method.
Which is the better forecast method?
Sales
Year Quarter Sales
1 1 144
2 151
3 134
4 151
2 1 145
2 145
3 141
4 166
3 1 151
2 164
3 151
4 176
4 1 170
2 180
3 156
4 187
5 1 166
2 182
3 154
4 169
Problem 2
Problem 2 (Note use sheet called Sales+)
Given sales projections (quarterly) for 4 straight years and the advertising costs for the same periods.
Compute a linear regression model and determine if is a good model/fit.
Support your determination using available good fit testing.
Sales +
Year Quarter Sales Advertising 3 months 5 months 3months weigh Exp smooth 3months e
or 5months e
or 3month weighted e
or Exp smooth e
o
1 1 144 41
2 151 51
3 134 32
4 151 45
2 1 145 48
2 145 34
3 141 29
4 166 43
3 1 151 40
2 164 51
3 151 39
4 176 54
4 1 170 41
2 180 52
3 156 48
4 187 47
5 1 166 44
2 182 48
3 154 44
4 169 36
Problem 3
Problelm 3 (NOTE: Use 2 sheets titles county (Table 2) and carlson (Table 1))
FORECASTING LOST SALES
The Carlson Department Store suffered heavy damage when a hu
icane struck on August 31, 2000. The store was closed for four months (September 2000 through December 2000), and Carlson is now involved in a dispute with its insurance company about the amount of lost sales during the time the store was closed. Two key issues must be resolved: (1) the amount of sales Carlson would have made if the hu
icane had not struck and (2) whether Carlson is entitled to any compensation for excess sales due to increased business activity after the storm. More than $8 billion in federal disaster relief and insurance money came into the county, resulting in increased sales at department stores and numerous other businesses. Table 1 gives Carlson's sales data for the 48 months preceding the storm. Table 2 reports total sales for the 48 months preceding the storm for all department stores in the county, as well as the total sales in the county for the four months the Carlson Department Store was closed. Carlson's managers have asked you to analyze these data and develop estimates of the lost sales at the Carlson Department Store for the months of September through December 2000. They also have asked you to determine whether a case can be made for excess storm-related sales during the same period. If such a case can be made, Carlson is entitled to compensation for excess sales it would have earned in addition to ordinary sales.
Table1. Carlson’s Sales.
Table 2. Department Store Sales.
Managerial Report.
Prepare a report for the managers of the Carlson Department Store that summarizes your findings, forecasts, and recommendations. Include:
1. An estimate of sales had there been no hu
icane.
2. An estimate of countywide department store sales had there been no hu
icane.
3. An estimate of lost sales for the Carlson Department Store for September through December 2000.
In addition, use the countywide actual department stores sales for September through: December 2000 and the estimate in part (2) to make a case for or against excess storm related sales.
county
county sales
55.8
56.4
71.4
117.6
46.8
48
60
57.6
61.8
58.2
56.4
63
57.6
53.4
71.4
114
46.8
48.6
59.4
58.2
60.6
55.2
51
58.8
49.8
54.6
65.4
102
43.8
45.6
57.6
53.4
56.4
52.8
54
60.6
47.4
54.6
67.8
100.2
48
51.6
57.6
58.2
60
57
57.6
61.8
69
75
85.2
121.8
carlson
sales
1.71
1.9
2.74
4.2
1.45
1.8
2.03
1.99
2.32
2.2
2.13
2.43
1.9
2.13
2.56
4.16
2.31
1.89
2.02
2.23
2.39
2.14
2.27
2.21
1.89
2.29
2.83
4.04
2.31
1.99
2.42
2.45
2.57
2.42
2.4
2.5
2.09
2.54
2.97
4.35
2.56
2.28
2.69
2.48
2.73
2.37
2.31
2.23