National Scan, Inc

Subject:BusinessPrice: Bought3

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National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows:

Month	Sales (000 units)
Feb.	19
Mar.	18
Apr.	15
May	20
Jun.	18
Jul.	22
Aug.	20

a. Plot the monthly data on a sheet of graph paper.

b. Forecast September sales volume using each of the following:

1. The naive approach

2. A five-month moving average

3. A weighted average using .60 for August, .30 for July, and .10 for June

4. Exponential smoothing with a smoothing constant equal to .20, assuming a a March forecast of 19(000)

5. A linear trend equation

c. Which method seems least appropriate? Why? (Hint: Refer to your plot from part a.)

d. What does use of the term sales rather than demand presume?

3. A dry cleaner uses exponential smoothing to forecast equipment usage at its main plant. August usage was forecasted to be 88 percent of capacity; actual usage was 89.6 percent of capacity. A smoothing constant of .1 is used.

a. Prepare a forecast for September.

b. Assuming actual September usage of 92 percent, prepare a forecast for October usage.

4. An electrical contractor’s records during the last five weeks indicate the number of job requests:

Week	1	2	3	4	5
Requests	20	22	18	21	22

Predict the number of requests for week 6 using each of these methods:

a. Naive

b. A four-period moving average

c. Exponential smoothing with α = .30; use 20 for week 2 forecast

8. Air travel on Mountain Airlines for the past 18 weeks was:

Week	Passengers
1	405
2	410
3	420
4	415
5	412
6	420
7	424
8	433
9	438
10	440
11	446
12	451
13	455
14	464
15	466
16	474
17	476
18	482

a. Explain why an averaging technique would not be appropriate for forecasting.

b. Use an appropriate technique to develop a forecast for the expected number of passengers for the next three weeks.