Part 1 Forecasting The sonam Corporation had the following s

Part 1 (Forecasting)

The sonam Corporation had the following sales during the past 10 years (in $1000s):

Year

Sales

2003

200

2004

215

2005

237

2006

260

2007

278

2008

302

2009

320

2010

345

2011

360

2012

382

a. Calculate a trend line, and forecast sales for 2013. How confident are you of this forecast?

b. Use exponential smoothing with a smoothing factor w = 0.7. What is your 2013 forecast? How confident are you of this forecast?

Part 2.(Forecasting)

You have the following data for the last 12 months’ sales for the PRQ Corporation (in $1000s):

Month

Sales

January

500

February

520

March

520

April

510

May

530

June

580

July

610

August

620

September

580

October

550

November

510

December

480

a. Calculate a 3-month centered moving average.

b. Use this moving average to forecast sales for January of next year.

c. If you were asked to forecast January and February sales for next year, would you be confident of your forecast using the preceding moving average? Why or why not?

please include the explaination if you can

Year	Sales
2003	200
2004	215
2005	237
2006	260
2007	278
2008	302
2009	320
2010	345
2011	360
2012	382

Solution

a. The regression equation of the trend line is The regression equation is
Sales = - 41040 + 20.6 Year

for the year 2013, forecast sales is 403.133. Since this regression coefficient specifies there is a linear relation ship between the year and sales. So the forecasted sales for the 2013 is justified.

b.using exponential smoothing :

The forecasted sales for the year is 373.151

Please ask one question in one post.

Week	Calls	Exponential smoothing alpha=0.7	Exponential smoothing forecast
2003	200	200
2004	215	210.5	200
2005	237	229.05	210.5
2006	260	250.715	229.05
2007	278	269.8145	250.715
2008	302	292.3444	269.8145
2009	320	311.7033	292.3444
2010	345	335.011	311.7033
2011	360	352.5033	335.011
2012	382	373.151	352.5033
2013			373.151