Applying Time Series

Market Analysis

To: Myra Reid, VP Production

From: Self

Date: August 12, 2011

Subject: Sales Forecast for Blue’s Inc.

To stay competitive in the market today right business decisions need to be made. Providing reasonably accurate forecasts can help to ensure this. The Blue’s Inc has been very competitive in recent years. To continue to reach or surpass this level of competition a three-week research project was conducted to reach a future sales forecast for Blue’s Inc. Below is a description of the research and a decision on the forecast for Blue’s Inc.

Three variables, which are sales, retail coverage and competitor’s budget are taken into consideration for the forecast. All three variables are important but the sales variable for the regression analysis has the highest correlation coefficient. Sales and advertising is at .96. With sales as the independent variable the decision on the advertising budget is 196 million. This is an increase in budget that follows suit with competition. To help reach Blue’s Inc goal of becoming the industry leader an increase in budget is beneficial.

After researching 12 years of fluctuations within the industry a sales forecast was made. The sales forecast is 777 million for the industry. Blue’s is 6% of this forecast. With these numbers and a two-period weighted moving average model with a weight of .90, the company needs to produce 47 million units to meet current market demands.

Research of the last 12 years of quarterly sales figures helps the company to achieve a quarterly production forecast. Using a centered moving average with a six-year data range the company can adjust for seasonal variations.

First quarter production is at 11-12.

Second quarter production is at 13-14.

Third quarter production is at 12-13.

Fourth quarter production is at 19-20

With these results for Blue’s Inc the company should be able to advertise at the optimum level of competition and continue to strive in the...