Inventory Forecasting in Accounting

532 Words2 Pages
Inventory Forecasting Businesses will often use past performance for different times of the year as an indicator for the forthcoming months. In many businesses there are likely to be patterns; some times of year where demand for their goods increases, and other times when it decreases. When a business has historical data forecasting may be undertaken using the past results as a guide to the potential future demand. The first stage of forecasting is to create an index using the existing data. The data is provided on a monthly basis, so the forecast can be created on a monthly basis. The data over the four year period provided is placed into a table, which can be used to assess the average for that each month, as shown in table 1. Table SEQ Table * ARABIC 1; Monthly Average Inventory Month Year 1 Year 2 Year 3 Year 4 Average 1 18,000 45,100 59,800 35,500 39,600 2 19,800 46,530 30,740 51,250 37,080 3 15,700 22,100 47,800 34,400 30,000 4 53,600 41,350 73,890 68,000 59,210 5 83,200 46,000 60,200 68,100 64,375 6 72,900 41,800 55,200 61,100 57,750 7 55,200 39,800 32,180 62,300 47,370 8 57,350 64,100 38,600 66,500 56,638 9 15,400 47,600 25,020 31,400 29,855 10 27,700 43,050 51,300 36,500 39,638 11 21,400 39,300 31,790 16,800 27,323 12 17,100 10,300 31,100 18,900 19,350 Avg. 38,113 40,586 44,802 45,896 42,349 With the average calculated, each month's actual use may be calculated as a
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