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Alan Gomez is the GM of a fairly successful enterprise selling hardware accessories used mainly in DIY tasks such as bolts and nuts, screws, sealants,
Alan Gomez is the GM of a fairly successful enterprise selling hardware accessories used mainly in DIY tasks such as bolts and nuts, screws, sealants, taps and toilet flushing systems, pipes and tubing's, power drills, etc. For the past 5 years, Alan has been performing sales forecasting of his 3 most saleable products based on his experience and "feel" of the prospects for the DIY business. Recently, he attended a course in Marketing where he learned some of the common forecasting methods which are directly relevant to his business. Being busy with plans to start a new DIY outlet, Alan directed you as the Marketing Manager to conduct a forecasting analysis of the company's monthly sales for a reputable brand of power drills using the last 15 months of sales data. The data are presented below: Month Units sold per month 1 123 95 106 75 115 56 75 134 110 93 11 102 12 72 13 89 14 112 15 95 Table 2.3 - Monthly sales (units) of Power Drills (1) Plot a graph of the above data and explain why it may not be appropriate to apply the Time Series method of forecasting to analyse the monthly sales of power drills. (Graph= 2 marks) (Explanations = 2 marks) SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) Page 11 of 12 BUS107 (Online) Group-based Assignment (ii) Determine and tabulate the forecasts, related errors and squared errors using the Weighted Moving Average (WMV) method and the Exponential Smoothing (ES) method. Use the information given below. Round off all forecasts to two (2) decimal places. You are required to provide the manual calculations of the first three (3) forecasts in each of the forecasting methods. WMV method: K =3 Weight for the most recent data = 4/7 Weight for the next most recent data = 2/7 Weight for the least recent data = 1/7 ES method: a = 0.3 Assume F1 = 123 units of power drills sold per month (Forecasts and errors from both methods= 8 marks) (iii) Which of the two (2) methods of forecasting provides a better forecast accuracy based on the MSE? State your reason(s). (2 marks) (iv) Discuss briefly three (3) practical factors which can cause forecast errors in the sales of power drills. (6 marks)
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