National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows:

Month Sales (000 units)

Feb. 19 Mar. 18 Apr. 15 May 20 Jun. 18 Jul. 22 Aug. 20

a. Plot the monthly data on a sheet of graph paper.

b. Forecast September sales volume using each of the following:

(1) The naive approach

(2) A five-month moving average

(3) A weighted average using .60 for August, .30 for July, and .10 for June

(4) Exponential smoothing with a smoothing constant equal to .20, assuming a a March forecast of 19(000)

(5) A linear trend equation

c. Which method seems least appropriate? Why? (Hint: Refer to your plot from part a.)

d. What does use of the term sales rather than demand presume?

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