Statistics

Applying Time Series Methodologies Simulation

To: Myra Reid, VP Production

From: Berlisa Daniels

Subject: Sales Forecast

Forecasting that is accurate and making the right business decision must be made for the continued success in an organization. This is just as important in Blue’s Incorporated. A forecast was maintained after a period of time to reach a decision about the future sales forecast for the business.

Blue’s Inc is on its way to becoming a very competitive world class leader in the denim business. Blue’s Incorporated will remain ahead of other competitors by reviewing the current advertising budget along with the competition’s advertising budget. The Market Analyst has to make a decision to change the current advertising budget. Changes to the advertising budget will allow Blue’s incorporated to expand their brand name. The goal of the company is to exceed in its budget goals and be the leader in the industry.

In the first week, the advertising budget was set at $162 million. Market share for Blue’s Incorporated is 6% of the $40 billion denim industry. Setting the advertising budget to $162 million ensures a great future for Blue’s Incorporation.

The second week that task assigned was to study the up and down movement in the market size and arrive at a sales forecast. The task included studying the average model, k-period for the average model and the production level. A weighted moving average was chosen as well as a 2 (k-period). The weights were estimated at 0.9 for 10 years and 0.2 for 12 years. The production level is 45.00 million units. This decision resulted in being one that could have a negative impact on the future of Blue’s Inc.

The third week the quarterly forecast was examined and analyzed. The centered moving average model was chosen and a data range of 4 years. The decision to fix production levels at 10 million units for the first quarter and 12 million units for the second quarter, 13 million units...