Beyond Tea Inc wants to forecast sales of its menthol green

Beyond Tea Inc. wants to forecast sales of its menthol green tea. The company wants to use simple mean or a three period moving average forecast monthly sales. Given sales data for the past 10 months use both forecasting methods to forecast periods 7 to 10 and then evaluate each. Which method should they use? Use the selected method to make a forecast for month 11. Show all work. No Excel.

MONTH                                                SALES

1                                                              5

2                                                              8

3                                                              15

4                                                              18

5                                                              20

6                                                              19

7                                                              17

8                                                              18

9                                                              19

10                                                           21

Solution

1)three period moving average forecast monthly sales

Particulars             =                 Sales

4th month= 5+8+15/3=28/3=9.3

5th month = 8+15+18 /3=13.6

6th month =15+18+20=53/3=17.6

7th month = 18+20+19/3=57/3=19

8th month=20+19+17/3=56/3=18.6

9th month =19+17+18=54/3=18

10 month = 17+18+19/3=18

first method for 11 month calculations= If it is 3 month moving periods, 8 + 9+ 10 = 18 + 19 + 21 /3 =19.3

Second Method for 11 month calculations = Forecasting methods to forecast periods 4 month, 7+ 8 + 9+ 10/4 =17+18+19+21/4=18.75(sales)

3 month moving period is better =19.3 sales.

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