Essay about Forecasting with Indices

Submitted By jd345345
Words: 1023
Pages: 5
Open Document
Forecasting with Indices
Jerry Dennis
QRB 501
April 29, 2013
Susan Swanson

Forecasting with Indices
There are no absolute certainties in volatile economic environments. Forecasting is a method for managers to predict future outcomes based on past performance in an attempt to prepare for presented complexities and constraints. For the purposes of the week three individual assignment the Winter Historical Inventory Data was utilized to develop a fifth year forecast. This data was comprised of four years of typical seasonal demand of winter highs and separated by individual months; see Table 1. Table 1 | | | | | | Winter Historical Inventory Data | | | | | | | Year 1 | Year 2 | Year 3 | Year 4 | 1 | 55200 | 39800 | 32180 | 62300 | 2 | 57350 | 64100 | 38600 | 66500 | 3 | 15400 | 47600 | 25020 | 31400 | 4 | 27700 | 43050 | 51300 | 36500 | 5 | 21400 | 39300 | 31790 | 16800 | 6 | 17100 | 10300 | 31100 | 18900 | 7 | 1800 | 45100 | 59800 | 35500 | 8 | 19800 | 46530 | 30740 | 51250 | 9 | 15700 | 22100 | 47800 | 34400 | 10 | 53600 | 41350 | 73890 | 68000 | 11 | 83200 | 46000 | 60200 | 68100 | 12 | 72900 | 41800 | 55200 | 61100 |

The original data is useful in understanding and depicting an exact representation of inventory but has little substantive value for extrapolating meaningful information for planning and forecasting. An index was created to figure out which values were above the monthly average and which were below; see Table 2.

Table 2 | | | | | | | Index | | | | | | | | | | | | Year 1 | Year 2 | Year 3 | Year 4 | Average | 1 | 1.165294 | 0.840194 | 0.679333 | 1.315178 | 1.240236 | 2 | 1.01258 | 1.131759 | 0.681527 | 1.174134 | 1.093357 | 3 | 0.515826 | 1.594373 | 0.838051 | 1.05175 | 0.783788 | 4 | 0.698833 | 1.086093 | 1.294229 | 0.920845 | 0.809839 | 5 | 0.783237 | 1.438375 | 1.16351 | 0.614878 | 0.699058 | 6 | 0.883721 | 0.5323 | 1.607235 | 0.976744 | 0.930233 | 7 | 0.050633 | 1.268636 | 1.682138 | 0.998594 | 0.524613 | 8 | 0.533981 | 1.254854 | 0.829018 | 1.382147 | 0.958064 | 9 | 0.523333 | 0.736667 | 1.593333 | 1.146667 | 0.835 | 10 | 0.905252 | 0.698362 | 1.247931 | 1.148455 | 1.026854 | 11 | 1.292427 | 0.714563 | 0.935146 | 1.057864 | 1.175146 | 12 | 1.262338 | 0.72381 | 0.955844 | 1.058009 | 1.160173 |

To determine the values indicated in the index chart above the monthly averages were calculated for all four years of historical data. For instance; the January average for years one through four was determined to be 47370. The actual January inventory data for year one was then divided by the average to yield an index of 1.165294. If the index is greater than one, the inventory for that month was greater than the average. If equal to one, the inventory was exactly the same as the monthly average. If the index was less than one then the inventory was less than the monthly average. A better understanding of the historical data can be obtained when presented in an index. The index chart is more effective at interrupting the historical data. When evaluating the index chart above it is instantly apparent the highest seasonal demand for winter highs is in the months of January, February, October, November and December. When organizing and planning for the future business needs an index chart would be instrumental in determine the meaning of raw data.

Forecasting
The first forecasting method which was used was a mathematical technique to further extrapolate the data. The assumptions of mathematical forecasting are the responsible entities for creating the past will continue to influence in the future. Using the mathematical tools in Microsoft Excel a trend forecast was created. After the data was imputed Excel created a Linear Forecast Trendline; see Figure 1.
Figure 1 Index Graph with Linear Forecast Trendline

The slop and the intercept of the line were determined. The slope was
Show More

Related Documents: Essay about Forecasting with Indices

Forecasing with Indices Essay

Forecasting With Indices Zaida L. Torres Vázquez, Reynaldo Sánchez Piñeiro, Jessica Lozada Rosario University of Phoenix QRB/501 September 9, 2012 Prof. Víctor Mojica Forecasting With Indices The information provided by the Winter Inventory covers a time frame of twelve months over a period of four years. With this information we calculate the Simple Index between each year starting with the first and second year, second and third year, third and fourth year, and first and fourth year.…

Words 593 - Pages 3

Qrb Reasoning for Busined Essay

solution. This document will exhibit a breakdown of the Winter Historical Inventory data provided by University of Phoenix. Create a histogram of the Winter Historical Inventory statistics using Microsoft excel. Team A will also measure the seasonal indices to evaluate the inventory data to circumvent inaccuracies in forecast, and conclusions made on the foundation of forecasts (Sevilla, 2007). Company Overview Costco Wholesale Corporation is known as the largest wholesale club operating in the…

Words 2217 - Pages 9

Analysis On Forecasting

QUANTITATIVE ANALYSIS FOR MANAGEMENT Forecasting Barry Render / Ralph M. Stir, JR. Summarized by - NOPPOL BEOKHAIMOOK Learning Objectives (1) Students will be able to: – Understand and know when to use various families of forecasting models – Compare moving averages, exponential smoothing, and trend time-series models – Seasonally adjust data. – Understand Delphi and other qualitative decision-making approaches 1 Learning Objectives (2) Students will be able to: – Identify independent and dependent…

Words 5226 - Pages 21

Active Portfolio Essay

…………………………………………………………..4 • Mean-variance frontier of our stocks • Optimal combination of our portfolio • Equity returns as a linear relation of their beta exposures Active Equity MANAGEMENT ……………………………………………………..6 • Forecasting of the returns • Optimal active positions for a maximized Information Ratio • Maximization of the value-added function INTRODUCTION The first step required in building our portfolio was to choose the constituents…

Words 4051 - Pages 17

Notes on Management Accounting Essay

Unit 7: Management Accounting Unit code: J/502/5419 QCF Level 3: BTEC National Credit value: 10 Guided learning hours: 60 Aim and purpose The aim of this unit is to enable learners to understand how important management accounting is to all businesses. It looks at costing and budgeting, and how to use current or historical financial data to plan for the effective finances and costs of the business for the future. Unit introduction Whether an organisation is successful…

Words 4482 - Pages 18

strategic HR planning - Stonewall cas Essays

planning should facilitate the attainment of the strategic business goals, either under the corporate strategy for merger and acquisition or under the business strategy for expansion or downsizing. 4. Identify and explain the various techniques for forecasting labour supply and labour demand. What can organizations do in the short run when they recognize a gap in which supply far exceeds demand. What could Stonewall do in this situation? (20 marks) There are two categories of techniques that can be used…

Words 2298 - Pages 10

Marketing Research Reveals Consumer Behavior Essay

MARKETING RRESEARCH Marketing Research plays a very significant role in identifying the needs of customers and meeting them in best possible way. The main task of Marketing Research is systematic gathering and analysis of information. It can be defined as "the function that links the consumers, customers, and public to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing…

Words 1580 - Pages 7

Relationship Between Exchange Rate and Stock Market Essay

Pir Mehr Ali Shah University of Arid Agriculture Rawalpindi The Relationship between Stock Prices and Exchange Rate, Evidence from Pakistan Usman Azhar 08-arid-1606 Abid Hussain 08-arid-1608 Faisal Shahzad 08-arid-1620 Usman Fazal 08-arid-1634 MBA Finance University Institute of Management Sciences Dedication We would like to dedicate this accomplishment to our beloved and caring parents, and to our teachers with the…

Words 7404 - Pages 30

Case Study ‘Acton-Burnett, Inc.’ Essay

chairman, Baker takes the lead to a newly created, cross functional task force. The idea is cascaded from top to down to him, across two layers of hierarchy. Very little is as well said about Acton’ and Herd’ ideas, except that they ‘feel’ that forecasting is an issue following significant loses in Q1 1975. Subsequently, Ryan and Keen appoint a task force on behalf of Baker. That Baker had no influence on…

Words 2876 - Pages 12

Essay on Study of Seasonality in the Indian Stock Market

| FINANCE TESTING SEASONALITY IN THE INDIAN STOCK MARKET A Project Report submitted in partial fulfillment of the requirements for the Degree of Master of Business Administration Under the guidance of: Dr. S.K. Tuteja Submitted by: Sachin Garg F-045, MBA(FT) 2011-13 Faculty of Management Studies University of Delhi Delhi – 110007 CERTIFICATE This is to certify that this project report titled “Testing Seasonality in the Indian Stock Market”, submitted in partial fulfilment…

Words 21604 - Pages 87