National Mixer, Inc., sells can openers. Monthly sales for a seven-month period were as follows:
Sales
Month (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) A linear trend equation.
(2) A five-month moving average.
(3) Exponential smoothing with a smoothing constant equal to .20, assuming a March forecast of 19(000).
(4) The naive approach.
(5) A weighted average using .60 for August, .30 for July, and .10 for June.
c. Which method seems least appropriate? Why?
d. What does use of the term sales rather than demand presume?