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?