The monthly sales for Otter Batteries, Inc., were as follows: Plot the monthly sales data. Forecast January sales of the next year using each of the following: Naive method. A-3month moving average. A 3-month weighted average using .2, .3, and.5, with the heaviest weights applied to the most recent months. Exponential smoothing using an alpha=.5 and a September forecast of 70. A trend projection.
The monthly sales for Otter Batteries, Inc., were as follows: Plot the monthly sales data. Forecast January sales of the next year using each of the following: Naive method. A-3month moving average. A 3-month weighted average using .2, .3, and.5, with the heaviest weights applied to the most recent months. Exponential smoothing using an alpha=.5 and a September forecast of 70. A trend projection.
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...
Related questions
Question
![### Forecasting Techniques and Sales Data Analysis
#### Overview
This exercise focuses on forecasting techniques using monthly sales data for Otter Batteries, Inc. The tasks involve plotting data, calculating forecasts using different methods, and understanding trends over a year.
#### Monthly Sales Data
The table below shows the monthly sales for Otter Batteries, Inc.
| X | Month | Sales |
|----|-------|-------|
| 1 | Jan | 30 |
| 2 | Feb | 50 |
| 3 | Mar | 30 |
| 4 | Apr | 66 |
| 5 | May | 70 |
| 6 | Jun | 65 |
| 7 | Jul | 60 |
| 8 | Aug | 70 |
| 9 | Sep | 80 |
| 10 | Oct | 99 |
| 11 | Nov | 110 |
| 12 | Dec | 120 |
#### Tasks
1. **Plot the monthly sales data.**
- Create a graph with "Month" on the x-axis and "Sales" on the y-axis to visualize the trend and fluctuations over the year.
2. **Forecast January sales of the next year using each method:**
- **Naive Method**: Assume that the sales for January next year will be the same as this December: 120.
- **3-Month Moving Average**:
- Calculate the average of sales for October, November, and December:
\[
\text{Average} = \frac{99 + 110 + 120}{3} = 109.67
\]
- **3-Month Weighted Average**:
- Apply weights of 0.2 (Oct), 0.3 (Nov), and 0.5 (Dec):
\[
\text{Weighted Average} = (99 \times 0.2) + (110 \times 0.3) + (120 \times 0.5) = 113.1
\]
- **Exponential Smoothing (α = 0.5)**:
- Use the formula: \( S_t = α \times A_t + (1 - α) \times S_{t-1} \](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4100da26-36bd-43a6-aafd-ee8e0ffe886a%2F0ac57a22-c3d6-4f25-b65d-b25e268d1134%2F0t0yk3k_processed.png&w=3840&q=75)
Transcribed Image Text:### Forecasting Techniques and Sales Data Analysis
#### Overview
This exercise focuses on forecasting techniques using monthly sales data for Otter Batteries, Inc. The tasks involve plotting data, calculating forecasts using different methods, and understanding trends over a year.
#### Monthly Sales Data
The table below shows the monthly sales for Otter Batteries, Inc.
| X | Month | Sales |
|----|-------|-------|
| 1 | Jan | 30 |
| 2 | Feb | 50 |
| 3 | Mar | 30 |
| 4 | Apr | 66 |
| 5 | May | 70 |
| 6 | Jun | 65 |
| 7 | Jul | 60 |
| 8 | Aug | 70 |
| 9 | Sep | 80 |
| 10 | Oct | 99 |
| 11 | Nov | 110 |
| 12 | Dec | 120 |
#### Tasks
1. **Plot the monthly sales data.**
- Create a graph with "Month" on the x-axis and "Sales" on the y-axis to visualize the trend and fluctuations over the year.
2. **Forecast January sales of the next year using each method:**
- **Naive Method**: Assume that the sales for January next year will be the same as this December: 120.
- **3-Month Moving Average**:
- Calculate the average of sales for October, November, and December:
\[
\text{Average} = \frac{99 + 110 + 120}{3} = 109.67
\]
- **3-Month Weighted Average**:
- Apply weights of 0.2 (Oct), 0.3 (Nov), and 0.5 (Dec):
\[
\text{Weighted Average} = (99 \times 0.2) + (110 \times 0.3) + (120 \times 0.5) = 113.1
\]
- **Exponential Smoothing (α = 0.5)**:
- Use the formula: \( S_t = α \times A_t + (1 - α) \times S_{t-1} \
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Step 1: Determine the given variables:
VIEWStep 2: Plot the monthly sales data
VIEWStep 3: Determine the forecast by naive method
VIEWStep 4: Determine the forecast by moving average method:
VIEWStep 5: Determine the forecast by weighted moving average method:
VIEWStep 6: Determine the forecast by Exponential smoothing method
VIEWStep 7: Determine the forecast by trend projection
VIEWSolution
VIEW
Trending now
This is a popular solution!
Step by step
Solved in 8 steps with 11 images
Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.