Directions: Please answer the following questions on a separate piece of paper. Where
appropriate, use the data in the following tables to answer the questions which reference
them. SHOW ALL WORK!!!
Table 6-1: Actual Sales Data
Time Period	Actual Sales
1	345
2	378
3	425
4	450
5	470
6	500
7	532
8	548
9	590
10	625
11	650
Table 6-2
Time Period	Actual Sales	3-Month Moving Average	Absolute Deviation	Weighted Moving Average W=.1,.3,.6	Absolute Deviation	Exponential Smoothing	Absolute Deviation
1	230					F(t)=350
2	238					326
3	260					308
4	275	243		250		299
5	300	258		267		294
6	285	278		289		295
7	270	287		278		293
8	290	285		284		289
9	305	282		297		289
10	320	288		313		292
11	335	305		328		298
12		320				305

Problems:

5. Refer to Table 6-2. For each of the three forecast methods used, calculate the mean absolute deviation (MAD). )Please remember that for the exponential smoothing model, the absolute deviation should NOT be calculated for period 1). Which forecasting model is best (other things constant), based on your calculations?

6. Refer to Table 6-1. Determine the regression line formula for this set of numbers, where time is the X value, and Y is the sales value.

7. Of its monthly sales, the Kingsman company historically has had 25% cash sales with the remainder paid within one month. Each months purchase are equal to 75% of the next months sales forecast; suppliers are paid one month after the purchase. Salary expenses are $50,000 a month, except in January when bonuses equal to 1 percent of the previous years sales are paid out. Interest (on a bond issue) of $10,000 is due in March. Overhead and utilities are expected to be $25,000 monthly. Dividends of $45,000 are to be paid in March. Kingsmans 1999 sales totaled $2 million; December sales were $200,000. Kingsmans estimated sales for January are $100,000; February, $200,000; March, $250,000; and April, $300,000. Assume that the ending December cash balance was $50,000, and that the company desires to keep a minimum cash balance of $40,000. For the Kingsman Company, determine in tabular form the cash budget for January, February, March, and April.