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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 company’s 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?

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Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659

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Chapter
Section
BuyFindarrow_forward

Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659
Chapter 13.3, Problem 2P
Textbook Problem
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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.

  1. a. Explain briefly whether the plot of the series visually supports the company’s suspicion.
  2. b. By what percentage are sales increasing each month?
  3. 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?
  4. 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?

a)

Summary Introduction

To determine: Whether the plot of series supports the suspicion of the firm.

Introduction: Forecasting is a technique of predicting future events based on historical data and projecting them into the future with a mathematical model. Forecasting may be an intuitive or subjective prediction.

Explanation of Solution

Data:

Formulae to determine the data:

b)

Summary Introduction

To determine: The increase in sales percentage each month.

Introduction: Forecasting is a technique of predicting future events based on historical data and projecting them into the future with a mathematical model. Forecasting may be an intuitive or subjective prediction.

c)

Summary Introduction

To determine: The value of MAPE and the measure using MAPE.

Introduction: Forecasting is a technique of predicting future events based on historical data and projecting them into the future with a mathematical model. Forecasting may be an intuitive or subjective prediction.

d)

Summary Introduction

To determine: The arithmetic that can be used to obtain forecasts for the next few months.

Introduction: Forecasting is a technique of predicting future events based on historical data and projecting them into the future with a mathematical model. Forecasting may be an intuitive or subjective prediction.

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Chapter 13 Solutions

Practical Management Science
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