Question

A convenience store recently started to carry a new brand of soft drink. Management is interested in estimating future sales volume to determine whether it should continue to carry the new brand or replace it with another brand. The following table provides the number of cans sold per week. Use both the trend projection with regression and the exponential smoothing​ (let

alpha=0.4

with an initial forecast for week 1 of

578​)

methods to forecast demand for week

13.

Compare these methods by using the mean absolute deviation and mean absolute percent error performance criteria. Does your analysis suggest that sales are trending and if​ so, by how​ much?

                                                                                                                                                                    

Period	1	2	3	4	5	6	7	8	9	10	11	12
Sales	578	624	638	738	647	605	760	716	690	714	650	745

​(i) Obtain the trend projection with regression forecast.

The forecast for week 13 is?

Answer 1

Trend Projection method:

The trend equation is

Sales = 613.485 + 9.528*Period

Forecast for period 13 = 613.485 + 9.528*13 = 737.349

Exponential smoothing forecast:

MAD and MAPE are lesser for trend projection method. Therefore, it is more accurate.