PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase, New York. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats Company in 2001, which added the Gatorade brand to its portfolio. As of January 26, 2012, 22 of PepsiCo's brands generated retail sales of more than $1 billion apiece, and the company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food and beverage business in the world. Your consulting firm has been hired to forecast the total revenues for PepsiCo, Inc. for each quarter of 2021. The company's past seasonal revenues are located below. Quarter 1 $12,049 $12,562 $12,884 $13,881 Total Revenues (Smillions) Quarter 2 $15,710 $16,090 $16,449 $15,945 Quarter 3 $16,240 $16,485 $17,188 $18,091 Quarter 4 $19,526 $19,524 $20,640 $22,455 Fiscal Year (FY) 2017 2018 2019 2020 Before continuing to the problems below, construct a time series plot (line chart) of PepsiCo revenue data. Use the data and this chart to answer the questions below. Apply smoothing techniques to forecast PepsiCo revenues. 1. a) Forecast the revenues (Smillions) for the 1s quarter of 2021. i. Use a four-period moving average to smooth the time series. Use a three-period weighted moving average to smooth the time series. [Use a weight of 0.6 for the most recent period, 0.3 for the next period back, and 0.1 for the third period back.] ii. iii. Use exponential smoothing with a smoothing constant of a = 0.1 to smooth the time series. b) In order to evaluate forecast accuracy, calculate the mean absolute error (MAE), mean squared error (MSE) and mean absolute percentage error (MAPE) for all three of the above smoothing techniques. Which of the three smoothing methods do you prefer? Why? c) Analyzing the time series chart previously constructed, do smoothing techniques appcar to be the most appropriate method of forecasting for this data? Explain.

PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase, New York. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats Company in 2001, which added the Gatorade brand to its portfolio. As of January 26, 2012, 22 of PepsiCo's brands generated retail sales of more than $1 billion apiece, and the company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food and beverage business in the world. Your consulting firm has been hired to forecast the total revenues for PepsiCo, Inc. for each quarter of 2021. The company's past seasonal revenues are located below. Quarter 1 $12,049 $12,562 $12,884 $13,881 Total Revenues (Smillions) Quarter 2 $15,710 $16,090 $16,449 $15,945 Quarter 3 $16,240 $16,485 $17,188 $18,091 Quarter 4 $19,526 $19,524 $20,640 $22,455 Fiscal Year (FY) 2017 2018 2019 2020 Before continuing to the problems below, construct a time series plot (line chart) of PepsiCo revenue data. Use the data and this chart to answer the questions below. Apply smoothing techniques to forecast PepsiCo revenues. 1. a) Forecast the revenues (Smillions) for the 1s quarter of 2021. i. Use a four-period moving average to smooth the time series. Use a three-period weighted moving average to smooth the time series. [Use a weight of 0.6 for the most recent period, 0.3 for the next period back, and 0.1 for the third period back.] ii. iii. Use exponential smoothing with a smoothing constant of a = 0.1 to smooth the time series. b) In order to evaluate forecast accuracy, calculate the mean absolute error (MAE), mean squared error (MSE) and mean absolute percentage error (MAPE) for all three of the above smoothing techniques. Which of the three smoothing methods do you prefer? Why? c) Analyzing the time series chart previously constructed, do smoothing techniques appcar to be the most appropriate method of forecasting for this data? Explain.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Transcribed Image Text:PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase, New York. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats Company in 2001, which added the Gatorade brand to its portfolio. As of January 26, 2012, 22 of PepsiCo's brands generated retail sales of more than $1 billion apiece, and the company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food and beverage business in the world. Your consulting firm has been hired to forecast the total revenues for PepsiCo, Inc. for each quarter of 2021. The company's past seasonal revenues are located below. Total Revenues ($millions) Quarter 2 $15,710 $16,090 $16,449 $15,945 Fiscal Year (FY) Quarter 1 $12,049 $12,562 $12,884 $13,881 Quarter 3 $16,240 $16,485 $17,188 $18,091 Quarter 4 $19,526 $19,524 $20,640 $22,455 2017 2018 2019 2020 Before continuing to the problems below, construct a time series plot (line chart) of PepsiCo revenue data. Use the data and this chart to answer the questions below. Apply smoothing techniques to forecast PepsiCo revenues. 1. a) Forecast the revenues ($millions) for the 1st quarter of 2021. i. Use a four-period moving average to smooth the time series. Use a three-period weighted moving average to smooth the time series. [Use a weight of 0.6 for the most recent period, 0.3 for the next period back, and 0.1 for the third period back.] ii. Use exponential smoothing with a smoothing constant of a = 0.1 to smooth the time series. iii. b) In order to evaluate forecast accuracy, calculate the mean absolute error (MAE), mean squared error (MSE) and mean absolute percentage error (MAPE) for all three of the above smoothing techniques. Which of the three smoothing methods do you prefer? Why? c) Analyzing the time series chart previously constructed, do smoothing techniques appear to be the most appropriate method of forecasting for this data? Explain.

PepsiCo, Inc.
(from SEC fillings)
Net
Revenue ($million)
Quarter
1st
Year
$12,049
$15,710
2017
2nd
3rd
$16,240
4th
$19,526
2018
1st
$12,562
$16,090
$16,485
$19,524
$12,884
2nd
3rd
4th
2019
1st
2nd
$16,449
$17,188
$20,640
$13,881
3rd
4th
2020
1st
2nd
$15,945
3rd
$18,091
$22,455
4th

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