Question
Mary Demerick, the COO of Swank Retailers in Phoenix, AZ, is busy looking over the most recent sales information for the company. She has called
Mary Demerick, the COO of Swank Retailers in Phoenix, AZ, is busy looking over the most recent sales information for the company. She has called a meeting of all salespersons in the region one week from today, and she is attempting to estimate the sales level that should be expected for their company over the next three months. She needs to have this information so that the sales quotas can be set for the individual salespersons. Her staff has accumulated historical sales data as shown in the Table on the next page. It is obvious to Mrs. Demerick that Swank's sales have a definite seasonal pattern from month to month. The nature of the retailing business causes the seasonal patterns, and the population growth of the region is probably responsible for the overall growth in sales. Mrs. Demerick expects these patterns and trends to continue.
For questions 7-8, use MAD over the last year (Year 3) as the basis for recommending either exponential smoothing (=0.8) or seasonalized time series analysis as the forecasting system to be used by Swank Retailers. 7. What is the MAD over Year 3 when you used exponential smoothing in question 3? 8. What is the MAD over Year 3 when you used seasonalized forecasting in questions 4-6? 9. Plot both the exponential smoothing and the seasonalized time series forecasts against the actual data for the most recent year on the graph. Is your graph consistent with your recommendation in questions 7-8?
Data to use:
| Period | Month | Actual Demand |
| Year 1 | Jan | 4.9 |
| Year 1 | Feb | 6.1 |
| Year 1 | Mar | 7.5 |
| Year 1 | Apr | 7.4 |
| Year 1 | May | 5.2 |
| Year 1 | Jun | 5.3 |
| Year 1 | Jul | 5.6 |
| Year 1 | Aug | 7.1 |
| Year 1 | Sep | 8 |
| Year 1 | Oct | 6.7 |
| Year 1 | Nov | 8.2 |
| Year 1 | Dec | 7.5 |
| Year 2 | Jan | 5.1 |
| Year 2 | Feb | 6.3 |
| Year 2 | Mar | 7.9 |
| Year 2 | Apr | 8 |
| Year 2 | May | 5.5 |
| Year 2 | Jun | 5.9 |
| Year 2 | Jul | 6.3 |
| Year 2 | Aug | 7.7 |
| Year 2 | Sep | 8.5 |
| Year 2 | Oct | 7.1 |
| Year 2 | Nov | 8.9 |
| Year 2 | Dec | 8.7 |
| Year 3 | Jan | 5.4 |
| Year 3 | Feb | 7.5 |
| Year 3 | Mar | 8.2 |
| Year 3 | Apr | 8.7 |
| Year 3 | May | 6.1 |
| Year 3 | Jun | 6.3 |
| Year 3 | Jul | 6.9 |
| Year 3 | Aug | 8.5 |
| Year 3 | Sep | 9 |
| Year 3 | Oct | 8.1 |
| Year 3 | Nov | 10.2 |
| Year 3 | Dec | 9.5 |
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Precalculus
Authors: Michael Sullivan
10th Global Edition
1292121772, 1292121777, 978-1292121772
