Reference no: EM131840144

Problem - Sales Forecasting

The Schonlind Company has gathered information regarding past sales:

Year	Sales
1999	$300,000
2000	225,000
2001	325,000
2002	650,000
2003	540,000
2004	675,000
2005	825,000

Required:

1. Predict the sales for 2006 using the moving average method.

2. You noticed a sudden jump in sales in 2002. After inquiring about this jump, you were told that there was a one-time sale for $200,000 in that year that is not likely to be repeated. What revision, if any, would you make in the sales information used for projection?

3. If you revised you historical sales to be used to project 2006 sales, recalculate your projection using the moving average method.

4. Which projection (question 1 or question 3) do you feel is more representative of the Schonlind Company's historical sales? Why?

Please complete the remaining questions using the revised historical data.

5. Predict the sales for 2006 using exponential smoothing.

6. Predict the sales for 2006 using a trend line technique using. (GROWTH function in Excel).

7. Predict the sales for 2006 using a graphing technique.

8. It has been suggested that sales for the company may be connected to disposal income. Using the information below regarding historical disposable income, predict the sale for 2006 using regression analysis if a reliable prediction for disposable income for 2006 is $35,430.

Year	Disposable Income
1999	$24,190
2000	26,194
2001	27,466
2002	29,994
2003	33,467
2004	36,348
2005	35,700

9. Which method do you think provides the most realistic sales projections for 2006? Why?