Question

6. Make revenue forecast for Pacific Shoes for 2020 based on historical data if the company generated the following revenues for the last five years. Calculate the forecast error, draw a graph with the actual and forecasted revenue by year, and show the forecast error on the graph.

Year.                      2015 2016 2017 2018 2019
Revenue (Million $) 23 27    27        32.     30

Answer 1

Answer:

Given that:

Make revenue forecast for pacific shoes for 2020 based on historical data if the company generated the revenues for the last five years.

Expected sales in the year 2020:

​​​​​​ The sales in the old (2015,2016,2017,2018,2019) year increases by decreasing order 3 and 2 .

sales in the year 2015 to 2017 is increases by 3 . Thus it expected that sales in the 2020 should be increases by 2 from the 2019 year sales.

Forecast sales:

Forecast sales in the year 2020 can be calculate as follows

Forecast sales= sales2015+sales2016+sales2017+sales2018+sales2019 / Number of years

=23+27+27+32+3 / 5

= 27.8

Forecasting sales in the year 2020 is 27.8 millions

Forecasting error:

Forecasting error can be calculated as follows:

Forecasting error = Actual - forecast / Actual *100

= 42- 27.8 / 42

= 0.33

Forecasting error is 0.33

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