Suppose that you are asked to forecast future stockprices of ABC Corporation, so you proceed to collectall available information. The day you announce yourforecast, competitors of ABC Corporation announce abrand new plan to merge and reshape the structure ofthe industry. Would your forecast still be consideredoptimal?

Suppose that you are asked to forecast future stockprices of ABC Corporation, so you proceed to collectall available information. The day you announce yourforecast, competitors of ABC Corporation announce abrand new plan to merge and reshape the structure ofthe industry. Would your forecast still be consideredoptimal?

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....

See similar textbooks

Similar questions

Under what conditions might a firm use multiple forecasting methods?
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?
Serena just visited a restaurant for dinner. During the dinner time, she overheard two customers saying that company TXL will expect its workforce to go on strike next week, which will halt manufacturing and distribution of products. When Serena gets back home, she immediately uses this information to update her analyst forecast on company TXL from a “buy” to a “sell”. Please explain which Standard is violated.
When a new business is started, or a patent idea needs funding, venture capitalists or investment bankers will want to see a business plan that includes forecast information related to profit and loss statements. What type of forecasting information do you think would the investors be looking for? Why?
The most naive forecast can is quite valuable in leading to an organization’s success because it is most widely understood by senior managers. True or False
The Victory Plus Mutual Fund of growth stocks has had the following average monthly price forthe past 10 months:Month Fund Price1 62.72 63.93 68.04 66.45 67.26 65.87 68.28 69.39 67.210 70.1Compute the exponentially smoothed forecast with a = .40 the adjusted exponential smoothing forecastwith a = .40 and B=30 and the linear trend line forecast. Compare the accuracy of the threeforecasts, using cumulative error and MAD, and indicate which forecast appears to be most accurate.
If ABC Corporation has following historical data about sales volume: Years Sales Years Sales Years Sales Years Sales 2001 110 2006 99 2011 100 2016 110 2002 112 2007 101 2012 104 2017 111 2003 122 2008 95 2013 108 2018 109 2004 111 2009 98 2014 102 2019 114 2005 104 2010 96 2015 115 2020 112 Note: All the sale values are in thousands. Required: Which type of forecasting approach is suitable for this type of data? Which forecasting technique is best to employ in order to forecast the above data? And also define the suggested technique. Calculate the predicted values by employing the discussed technique in part (b) on the above data.
All forecasts are subject to error. Do you think topmanagers would be concerned about the effectson the firm if sales revenues or unit costs, forexample, turned out to be different from the forecasted level? How could you provide informationon the effects of such errors?
In the Stokely Company, marketing makes a sales forecast by developing a sales force composite. Meanwhile, operations makes a forecast of sales based on past data, trends, and seasonal components. The operations forecastusually turns out to be 20 percent less than the forecast of the marketing department. How should forecasting in this company be done?
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.…
2-The correlation between rate and base are called the dynamic forecast. Select one: O True O False
How are you going to make your forecast more effective? Give a concrete example.