OOOOThe Davidson Company sells lumber and wants to decide how much inventory it will need over the next year. There is a significant amount of new construction going on in thecommunity. To assess the need for lumber, The Davidson Company looked at the data for lumber sales over the past several years and based his assumptions for future on pastOdata. This example shows that it's always a risky to predict growth, but a smart technique is toOO a gather data on the income level of the targeted segmentOb obtain sales data in the industry for several years and draw a conclusion through a moving averageO use the census data to see household trendsO d.obtain data on the age of potential home buyers A very general way marketers have approached the analysis of a market is by estimating the purchase decision-making process which includes all of the following elementsEXCEPT:O a. AwarenessO b. TrialOC RepeatO d. Positioning

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Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section: Chapter Questions

Problem 40P: The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels....

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The file P13_22.xlsx contains total monthly U.S. retail sales data. While holding out the final six months of observations for validation purposes, use the method of moving averages with a carefully chosen span to forecast U.S. retail sales in the next year. Comment on the performance of your model. What makes this time series more challenging to forecast?
Sometimes curvature in a scatterplot can be fit adequately (especially to the naked eye) by several trend lines. We discussed the exponential trend line, and the power trend line is discussed in the previous problem. Still another fairly simple trend line is the parabola, a polynomial of order 2 (also called a quadratic). For the demand-price data in the file P13_10.xlsx, fit all three of these types of trend lines to the data, and calculate the MAPE for each. Which provides the best fit? (Hint: Note that a polynomial of order 2 is still another of Excels Trend line options.)
The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels. Management is trying to decide whether direct labor hours (DLH) or units produced is the better measure of activity for the firm. Monthly data for the preceding 24 months appear in the file P13_40.xlsx. Use regression analysis to determine which measure, DLH or Units (or both), should be used for the budget. How would the regression equation be used to obtain the budget for the firms overhead costs?
The file P13_21.xlsx contains the weekly sales of rakes at a hardware store for a two-year period. Use the moving averages method, with spans of your choice, to forecast sales for the next 30 weeks. Does this method appear to track sales well? If not, what might be the reason?
The file P13_20.xlsx contains the monthly sales of iPod cases at an electronics store for a two-year period. Use the moving averages method, with spans of your choice, to forecast sales for the next six months. Does this method appear to track sales well? If not, what might be the reason?
Play Things is developing a new Lady Gaga doll. The company has made the following assumptions: The doll will sell for a random number of years from 1 to 10. Each of these 10 possibilities is equally likely. At the beginning of year 1, the potential market for the doll is two million. The potential market grows by an average of 4% per year. The company is 95% sure that the growth in the potential market during any year will be between 2.5% and 5.5%. It uses a normal distribution to model this. The company believes its share of the potential market during year 1 will be at worst 30%, most likely 50%, and at best 60%. It uses a triangular distribution to model this. The variable cost of producing a doll during year 1 has a triangular distribution with parameters 15, 17, and 20. The current selling price is 45. Each year, the variable cost of producing the doll will increase by an amount that is triangularly distributed with parameters 2.5%, 3%, and 3.5%. You can assume that once this change is generated, it will be the same for each year. You can also assume that the company will change its selling price by the same percentage each year. The fixed cost of developing the doll (which is incurred right away, at time 0) has a triangular distribution with parameters 5 million, 7.5 million, and 12 million. Right now there is one competitor in the market. During each year that begins with four or fewer competitors, there is a 25% chance that a new competitor will enter the market. Year t sales (for t 1) are determined as follows. Suppose that at the end of year t 1, n competitors are present (including Play Things). Then during year t, a fraction 0.9 0.1n of the company's loyal customers (last year's purchasers) will buy a doll from Play Things this year, and a fraction 0.2 0.04n of customers currently in the market ho did not purchase a doll last year will purchase a doll from Play Things this year. Adding these two provides the mean sales for this year. Then the actual sales this year is normally distributed with this mean and standard deviation equal to 7.5% of the mean. a. Use @RISK to estimate the expected NPV of this project. b. Use the percentiles in @ RISKs output to find an interval such that you are 95% certain that the companys actual NPV will be within this interval.
The file P13_02.xlsx contains five years of monthly data on sales (number of units sold) for a particular company. The company suspects that except for random noise, its sales are growing by a constant percentage each month and will continue to do so for at least the near future. a. Explain briefly whether the plot of the series visually supports the companys suspicion. b. By what percentage are sales increasing each month? c. What is the MAPE for the forecast model in part b? In words, what does it measure? Considering its magnitude, does the model seem to be doing a good job? d. In words, how does the model make forecasts for future months? Specifically, given the forecast value for the last month in the data set, what simple arithmetic could you use to obtain forecasts for the next few months?
The file P13_19.xlsx contains the weekly sales of a particular brand of paper towels at a supermarket for a one-year period. a. Using a span of 3, forecast the sales of this product for the next 10 weeks with the moving averages method. How well does this method with span 3 forecast the known observations in this series? b. Repeat part a with a span of 10. c. Which of these two spans appears to be more appropriate? Justify your choice.
To better plan for future growth of the restaurant, Karen needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. Table shows the value of food and beverage sales ($1000s) for the first three years of operation. Food and Beverage Sales for the Vintage Restaurant ($1000s) Month First Year Second Year Third Year January 242 263 282 February 235 238 255 March 232 247 265 April 178 193 205 May 184 193 210 June 140 149 160 July 145 157 166 August 152 161 174 September 110 122 126 October 130 130 148 November 152 167 173 December 206 230 235 Managerial Report Perform an analysis of the sales data for the Vintage Restaurant. Prepare a report for Karen that summarizes your findings, forecasts, and recommendations. Include the following: A time series plot. Comment on the underlying pattern in the time series.…
Engage: Inventory Planning: Forecasting during Uncertainty Inventory Planning: Forecasting During Uncertainty COVID-19 has unleashed unprecedented consumer demand and exposed fractures in the just-in-time supply chain model. In the span of just a few months, your supply chain may have changed drastically. Supplier shutdowns in China. Increased shipping demands. Decreased working capital. These evolving conditions impact your go-forward inventory strategy. Forecasting inventory requirements have always included a mix of past trends, sound predictions, and supplier relationships. But the uncertainties we are facing right now make this process more challenging. This includes Evolving consumer demands Product availability, and Predictable transportation Let's look at these inputs and how they may impact inventory planning. Uncertainties in Consumer Demand Consumer demand is on a roller coaster and the ride doesn’t seem to be slowing down soon. Shelter at home requirements have led…
Engage: Inventory Planning: Forecasting during Uncertainty Inventory Planning: Forecasting During Uncertainty COVID-19 has unleashed unprecedented consumer demand and exposed fractures in the just-in-time supply chain model. In the span of just a few months, your supply chain may have changed drastically. Supplier shutdowns in China. Increased shipping demands. Decreased working capital. These evolving conditions impact your go-forward inventory strategy. Forecasting inventory requirements have always included a mix of past trends, sound predictions, and supplier relationships. But the uncertainties we are facing right now make this process more challenging. This includes Evolving consumer demands Product availability, and Predictable transportation Let's look at these inputs and how they may impact inventory planning. Uncertainties in Consumer Demand Consumer demand is on a roller coaster and the ride doesn’t seem to be slowing down soon. Shelter at home requirements have led…
Use Excel to make calculations Given the following sales data: Quarter Year 1 Year 2 1 120 150 2 160 200 3 210 250 4 130 170 Compute the seasonal index for each quarter and forecast quarterly demand for year 3 with a projected annual demand of 1000. The efficiency of a production unit is 70 percent. The unit produces an average of 100 products per day. Determine the effective capacity of the unit. The utilization of a machine is 60 percent. The machine has a design capacity of 150 units per hour and an effective capacity of 100 units per hour. Find the efficiency of the machine. FloorsRUs is considering new locations for its manufacturing plants. Costs for constructing a new facility in Huntsville are $1,100,000 and the company estimates that for every product from its new line, there would be an additional cost of $3. If the company were to locate in Hays, the new facility would cost $1,800,000 and each product would incur a $2…

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