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) 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 naïve approach
5) A weighted average using .60 for August, .30 for July, and .10 for June.
c. Which method seems least appropriate? Why? (Hint: Refer to the plot from part a).
d. What does use of the term sales rather than demand presume?