Applying Time Series Methodologies Simulation

To: Myra Reid, VP Production

From: Market Analyst

Date: March 16, 2011

Subject: Sales forecast

As you know, a precise forecast and the right business choice must be made so that the company will have continued success. This concept rings true as well for Blue’s Incorporated. A precise forecast was kept up after a three week time frame to reach the desired decision about Blue’s Inc. future sales forecast.

Blue’s Inc. was designed to become the industry leader in denim products. As corporations strive to reach the top of the competitive success ladder, Blue’s Inc. will remain one step ahead of the competition. Blue’s Inc. will do this by evaluating the current advertising budget along with the competitors advertising budget. These changes to the budget will help Blue’s Inc., to increase the brand name. The goal of allowing Blue’s Inc. a time to shine is at hand.

For the first week the advertising budget was set at $169 million. Blue’s Inc. market share is 6% of the $40 billion in the denim industry. By changing Blue’s Inc. advertising budget to $169 million guarantees a bright future for the company.

The plan for the second week was to study the variability in the market size and arrive at a sales forecast. The tasks at hand included studying, the production level, the average model, and the k-period for the average model. A weighted moving average was picked, along with 2 k-periods. The weights were estimated at 0.8 for 11 years and 0.2 for 12 years, with a production level of 40.00 million units. With this decision it could possibly affect the future of the company in a negative way.

Some bad decisions were definitely made in the second week of research. For the third week, the quarterly forecast was scrutinized and analyzed. We used the centered moving average model and a data range of 6 years. We chose to fix the production levels: the first quarter we changed it to 12.00 million units, the second quarter 14.00 million units, the third quarter...