Question
I need help forecasting demand of 3 different types gas, regular, midgrade, and premium. I need to provide accurate forecasts of the demand for the
I need help forecasting demand of 3 different types gas, regular, midgrade, and premium. I need to provide accurate forecasts of the demand for the 3 types of gas monthly at the beginning of each month for 2 years total. (please at least explain how its done)
*The mean Absolute Percentage Error(MAPE) should ideally be less than 10%.
*Gas prices over the last 6 months are listed to get a sense of the market.
Actual Demand for last 6 months : Starting from July 2018 to Dec 2018
Regular gas-
*REGULAR GAS* | ACTUAL DEMAND |
1 | 10720 |
2 | 9375 |
3 | 9776 |
4 | 8571 |
5 | 7865 |
6 | 7740 |
Mid grade-
*MID GRADE GAS* | |
MONTH | ACTUAL DEMAND |
1 | 2010 |
2 | 1758 |
3 | 1833 |
4 | 1607 |
5 | 1475 |
6 | 1451 |
Premium-
*PREMIUM GAS* | |
MONTH | ACTUAL DEMAND |
1 | 670 |
2 | 586 |
3 | 611 |
4 | 536 |
5 | 492 |
6 | 484 |
*Pricing needs to be in line with the other gas stations around, and it's driven by the market conditions relating to the price of crude oil per barrel. It's really important that your forecasts are accurate because it can mess up a lot of other aspects of the business if it's not.
1. Gas sales across type of gasoline: 80% of gas sales tend to be regular, 15% tend to be midgrade, and 5% tend to be premium.
2. Effect of price on demand: Every $0.10 increase in the price per gallon of gas tends to decrease gallons of gas sold by 1% to 3 %.
Monthly Seasonal Factors: Chart representing the monthly seasonality factor for gasoline (a factor of 1.00 represents the baseline monthly demand
Table : Seasonal factors for monthly demand
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
0.87 | 0.95 | 1.00 | 1.05 | 1.08 | 1.15 | 1.13 | 1.07 | 1.02 | 0.94 | 0.89 | 0.85 |
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