Practical Management Science
5th Edition
ISBN: 9781305734845
Author: WINSTON
Publisher: Cengage
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Textbook Question
Chapter 14.6, Problem 21P
The file P14_21.xlsx contains the weekly sales of rakes at a hardware store for a two-year period. Use the moving averages method, with spans of your choice, to
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Which of the following is true about using forecasts?
Forecast accuracy decreases the farther into the future you are trying to predict.
Forecasts become more accurate when predicting further into the future.
Forecasts are useless when the future will look radically different from the past.
The more complex the forecast, the more accurate are the predictions.
The accuracy of forecasts does not vary from one application to another.
To better plan for future growth of the restaurant, Karen needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. Table shows the value of food and beverage sales ($1000s) for the first three years of operation.
Food and Beverage Sales for the Vintage Restaurant ($1000s)
Month
First Year
Second Year
Third Year
January
242
263
282
February
235
238
255
March
232
247
265
April
178
193
205
May
184
193
210
June
140
149
160
July
145
157
166
August
152
161
174
September
110
122
126
October
130
130
148
November
152
167
173
December
206
230
235
Managerial Report
Perform an analysis of the sales data for the Vintage Restaurant. Prepare a report for Karen that summarizes your findings, forecasts, and recommendations. Include the following:
A time series plot. Comment on the underlying pattern in the time series.…
Chapter 14 Solutions
Practical Management Science
Ch. 14.3 - Prob. 1PCh. 14.3 - Prob. 2PCh. 14.3 - Prob. 3PCh. 14.3 - Prob. 4PCh. 14.3 - Prob. 5PCh. 14.3 - Prob. 6PCh. 14.3 - Prob. 7PCh. 14.3 - Prob. 8PCh. 14.3 - Prob. 9PCh. 14.3 - Prob. 10P
Ch. 14.4 - Prob. 12PCh. 14.4 - Prob. 13PCh. 14.4 - Prob. 14PCh. 14.4 - Prob. 15PCh. 14.4 - Prob. 16PCh. 14.4 - Prob. 17PCh. 14.6 - Prob. 19PCh. 14.6 - Prob. 20PCh. 14.6 - The file P14_21.xlsx contains the weekly sales of...Ch. 14.6 - Prob. 22PCh. 14.7 - Prob. 23PCh. 14.7 - Prob. 24PCh. 14.7 - Prob. 25PCh. 14.7 - Prob. 26PCh. 14.7 - Prob. 27PCh. 14.7 - Prob. 28PCh. 14.7 - Prob. 29PCh. 14.7 - Prob. 30PCh. 14 - Prob. 31PCh. 14 - Prob. 32PCh. 14 - Prob. 33PCh. 14 - Prob. 34PCh. 14 - Prob. 35PCh. 14 - Prob. 36PCh. 14 - Prob. 37PCh. 14 - Prob. 39PCh. 14 - Prob. 40PCh. 14 - Prob. 41PCh. 14 - Prob. 42PCh. 14 - Prob. 43PCh. 14 - Prob. 44PCh. 14 - Prob. 45PCh. 14 - Prob. 46PCh. 14 - Prob. 49P
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- The file P13_20.xlsx contains the monthly sales of iPod cases at an electronics store for a two-year period. Use the moving averages method, with spans of your choice, to forecast sales for the next six months. Does this method appear to track sales well? If not, what might be the reason?arrow_forwardThe file P13_22.xlsx contains total monthly U.S. retail sales data. While holding out the final six months of observations for validation purposes, use the method of moving averages with a carefully chosen span to forecast U.S. retail sales in the next year. Comment on the performance of your model. What makes this time series more challenging to forecast?arrow_forwardThe file P13_19.xlsx contains the weekly sales of a particular brand of paper towels at a supermarket for a one-year period. a. Using a span of 3, forecast the sales of this product for the next 10 weeks with the moving averages method. How well does this method with span 3 forecast the known observations in this series? b. Repeat part a with a span of 10. c. Which of these two spans appears to be more appropriate? Justify your choice.arrow_forward
- The file P13_27.xlsx contains yearly data on the proportion of Americans under the age of 18 living below the poverty level. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why? b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Create a chart of the series with the forecasts superimposed from this optimal smoothing constant. Does it make much of an improvement over the model in part b? d. Write a short report to summarize your results. Considering the chart in part c, would you say the forecasts are good?arrow_forwardThe file P13_26.xlsx contains the monthly number of airline tickets sold by the CareFree Travel Agency. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why? b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Does it make much of an improvement over the model in part b?arrow_forwardThe file P13_28.xlsx contains monthly retail sales of U.S. liquor stores. a. Is seasonality present in these data? If so, characterize the seasonality pattern. b. Use Winters method to forecast this series with smoothing constants = = 0.1 and = 0.3. Does the forecast series seem to track the seasonal pattern well? What are your forecasts for the next 12 months?arrow_forward
- The file P13_29.xlsx contains monthly time series data for total U.S. retail sales of building materials (which includes retail sales of building materials, hardware and garden supply stores, and mobile home dealers). a. Is seasonality present in these data? If so, characterize the seasonality pattern. b. Use Winters method to forecast this series with smoothing constants = = 0.1 and = 0.3. Does the forecast series seem to track the seasonal pattern well? What are your forecasts for the next 12 months?arrow_forwardThe file P13_25.xlsx contains the quarterly numbers of applications for home mortgage loans at a branch office of Northern Central Bank. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why? b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Does it make much of an improvement over the model in part b? Is it guaranteed to produce better forecasts for the future?arrow_forwardThe Baker Company wants to develop a budget to predict how overhead costs vary with activity levels. Management is trying to decide whether direct labor hours (DLH) or units produced is the better measure of activity for the firm. Monthly data for the preceding 24 months appear in the file P13_40.xlsx. Use regression analysis to determine which measure, DLH or Units (or both), should be used for the budget. How would the regression equation be used to obtain the budget for the firms overhead costs?arrow_forward
- The file P13_02.xlsx contains five years of monthly data on sales (number of units sold) for a particular company. The company suspects that except for random noise, its sales are growing by a constant percentage each month and will continue to do so for at least the near future. a. Explain briefly whether the plot of the series visually supports the companys suspicion. b. By what percentage are sales increasing each month? c. What is the MAPE for the forecast model in part b? In words, what does it measure? Considering its magnitude, does the model seem to be doing a good job? d. In words, how does the model make forecasts for future months? Specifically, given the forecast value for the last month in the data set, what simple arithmetic could you use to obtain forecasts for the next few months?arrow_forwardThe file P13_01.xlsx contains the monthly number of airline tickets sold by a travel agency. a. Does a linear trend appear to fit these data well? If so, estimate and interpret the linear trend model for this time series. Also, interpret the R2 and se values. b. Provide an indication of the typical forecast error generated by the estimated model in part a. c. Is there evidence of some seasonal pattern in these sales data? If so, characterize the seasonal pattern.arrow_forwardThe file P13_42.xlsx contains monthly data on consumer revolving credit (in millions of dollars) through credit unions. a. Use these data to forecast consumer revolving credit through credit unions for the next 12 months. Do it in two ways. First, fit an exponential trend to the series. Second, use Holts method with optimized smoothing constants. b. Which of these two methods appears to provide the best forecasts? Answer by comparing their MAPE values.arrow_forward
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