A convenience store recently started to carry a new brand of soft drink. Managem

Question

A convenience store recently started to carry a new brand of soft drink. Management is interested in estimating future sales volume to determine whether it should continue to carry the new brand or replace it with another brand. The following table provides the number of cans sold per week. Use both the trend projection with regression and the exponential smoothing (let a=0.4 with an initial forecast for week 1 of 582) methods to forecast demand for week 13. Compare these methods by using the mean absolute deviation and mean absolute percent error performance criteria. Does your analysis suggest that sales are trending and if so. by how much? Obtain the trend projection with regression forecast. The forecast for week 13 is. (Enter your response rounded to the nearest whole number.) Specify the mean absolute deviation (MAD) and mean absolute percent error (MAPE). (Enter your responses rounded to two decimal places) Obtain the exponential smoothing forecast. The forecast for

Explanation / Answer

(a)

The regression equation from the given data is

Regression Analysis: Sales versus Period

The regression equation is
Sales = 617 + 9.85 Period

The forecasting for 13 is

          Sales = 617 + 9.85 (13)

         = 745.05

Forecast error = Actual Value (Y)– Forecast (F)

Mean Absolute Deviation (MAD) MAD = (Sum|forecast error|)/n = 367.7179487/12=31.39

MAPE = Sum (|forecast error|/Actual Data)/n = 0.557448/12 = 0.05 = 5%

ii)

The forecasting for 13 is      713.17

MAD = 539.3576491/12 = 44.95

MAPE = 0.06 = 6%

Best On MAD is " Regression forecasting "

Best on MAPE is also "Regression Forecasting"

Regression F.E. F.E/Actual data Period Sales Forecasting Forecasting Error F.E/Sales 1 582 627.179487 45.17948718 0.077627985 2 625 637.025641 12.02564103 0.019241026 3 647 646.871795 0.128205128 0.000198153 4 732 656.717949 75.28205128 0.102844332 5 679 666.564103 12.43589744 0.018315018 6 623 676.410256 53.41025641 0.085730749 7 739 686.25641 52.74358974 0.071371569 8 684 696.102564 12.1025641 0.017693807 9 721 705.948718 15.05128205 0.020875565 10 742 715.794872 26.20512821 0.035316884 11 660 725.641026 65.64102564 0.099456099 12 742 735.487179 6.512820513 0.008777386 Total: 376.7179487 0.557448574

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