Question

In: Statistics and Probability

Due to the ongoing COVID-19 pandemic, your employer closed down and retrenched all its employees. You...

Due to the ongoing COVID-19 pandemic, your employer closed down and retrenched all its employees. You decided to return to your hometown, a small town in the east coast of MARGATE. You noticed that there was no food delivery service business in the town and decided to start such a service using your cars. Your delivery riders would collect the orders from food outlets in the town and deliver the food to customers for a fee. However, you did not have sufficient funds to run the business. When you tried to obtain a business loan from a bank, the bank officer requested that you prepare a sales forecast for the proposed business.

i)   Explain two main challenges in making the sales forecast as required by the bank.

ii) Describe which specific method is suitable for the sales forecast and provide the reasons why you choose this method.

c) After the bank approved your loan, you began operating delivery service company as described in 2(b).

The company recorded the following number of deliveries in the last 6 months:

Month

Actual Deliveries

January

270

February

280

March

350

April

250

May

340

June

320

Due to the expected increase in deliveries, you approached the bank again to obtain another business loan. This time, the bank officer asked for a forecast of the deliveries for the rest of the year based on your July forecast. You decided to use naive, 3month moving average and 6-month moving average forecast methods.

i) Calculate your forecast for July using the three methods stated.

ii) If actual deliveries for July are 309, which one among the three methods is the most accurate using absolute deviation calculation?

Solutions

Expert Solution

Naive Method:

Period Demand Forecast Error Absolute Squared Abs Pct Err
Period 1 270
Period 2 280 270 10 10 100 03.57%
Period 3 350 280 70 70 4900 20.00%
Period 4 250 350 -100 100 10000 40.00%
Period 5 340 250 90 90 8100 26.47%
Period 6 320 340 -20 20 400 06.25%
Total 50 290 23500 96.29%
Average 10 58 4700 19.26%
Bias MAD MSE MAPE
SE 88.50612
Next period 320

3-month moving average:

Period Demand Forecast Error Absolute Squared Abs Pct Err
Period 1 270
Period 2 280
Period 3 350
Period 4 250 300 -50 50 2500 20.00%
Period 5 340 293.3333 46.66667 46.66667 2177.778 13.73%
Period 6 320 313.3333 6.666667 6.666667 44.44444 02.08%
Total 3.333333 103.3333 4722.222 0.3580882
Average 1.111111 34.44444 1574.074 0.1193627
Bias MAD MSE MAPE
SE 68.71843
Next period 303.333333

6-month moving average:

Not possible because there are only 6 data values.

3-month moving average is the most accurate using absolute deviation calculation.


Related Solutions

Due to Covid-19 pandemic, stores are temporarily closed, but e-commerce growth in the market remains strong....
Due to Covid-19 pandemic, stores are temporarily closed, but e-commerce growth in the market remains strong. Most of the growth we have seen in athletic footwear, for example, has come from the online channel. Provide your information technology strategy for short-term, mid-term and long term range planning. (Atleast 2-3 pages of word) CASE STUDY Source: The Star Online, New Straits Times THE economy may be slowing and the retail industry is going through a rough patch, but Al-Ikhsan Sports Sdn...
Due to the Lock Down to contain the Covid-19 pandemic, many self-employed and low income people...
Due to the Lock Down to contain the Covid-19 pandemic, many self-employed and low income people struggle to fulfill their basic needs. Suggest your recommendations for the government and firms to address the issue of basic needs fulfillment during this difficult situation. As detailed as possible, elaborate on at least a total of five recommendations.
By now, you know all bout CORONAVIRUS (COVID-19) as a pandemic threat to the world. COVID-19...
By now, you know all bout CORONAVIRUS (COVID-19) as a pandemic threat to the world. COVID-19 has and will have stressful effects on all of us--individually, family,socially, culturally, nationally, economically, technologically, and what not. Given the stressful and dangerous threat, what do you think COVID-19 will have on ECONOMIC manager's decisions--segmentation, product decisions, promotional activities, pricing, supply chain (distribution), and customer relationships. You can use any company that you are familiar with, including the ones you have worked for in...
In this exercise, we focus on the economic impact of the COVID-19 pandemic Due to the...
In this exercise, we focus on the economic impact of the COVID-19 pandemic Due to the COVID-19 pandemic, online teaching becomes a norm in many countries. What are the consequences of students switching to online learning in the following markets? a) (10 points) Laptops. b) (10 points) Classroom equipment (e.g., chairs, desks, whiteboards). There are four markets you need to analyze separately. Assume that each market is perfectly competitive with no frictions (i.e., equilibrium point is reached with no obstacles);...
From your own experience, how are the COVID-19 pandemic and the policies to combat the COVID-19...
From your own experience, how are the COVID-19 pandemic and the policies to combat the COVID-19 pandemic affecting the environment and the economy?
Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of...
Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of living? According to The New Geography of Jobs, Americans have historically been mobile, continually seeking new opportunities to improve their lives. The COVID-19 pandemic has caused people to remain indoors, and even some States have prevented unnecessary movement of people from one place to another. It is a huge change for many Americans who depend on constant mobility for their economic survival. As such,...
Since the beginning of 2020, the world is suffering from the pandemic. Due to Covid-19, the...
Since the beginning of 2020, the world is suffering from the pandemic. Due to Covid-19, the demand for surgical masks surges rapidly. Assuming firms that produce surgical masks only need machines that produce surgical masks and workers that operate the machines. What do you think would happen to the equilibrium wage and unemployment, if there is no quarantine in place? And if there is? Assuming we are talking about a small closed economy.
Due to the COVID-19 pandemic, the Federal Government stepped in and legislated in March 2020 to...
Due to the COVID-19 pandemic, the Federal Government stepped in and legislated in March 2020 to temporarily suspend key aspects of insolvent trading law in the Corporations Act 2001 (Cth) for a period of six months. The suspension was recently extended to last until 31 December 2020. In view of these events, do you think that the Federal Government should permanently remove (ie. abolish) Australian insolvent trading law, especially considering that no such equivalent law exists in the United States?...
At the moment, we are facing the pandemic of Covid-19. The virus spreads due to people's...
At the moment, we are facing the pandemic of Covid-19. The virus spreads due to people's mobility and the crowd. However, the government plans to conduct the general election on 7 November 2020, and starting from 1 October, each political party and candidate may start the campaign. Now, the problem is as follows: a) each candidate may follow the COVID-19 protocol during the campaign, by doing the campaign via zoom/ google meets (online campaign). They may also do the campaign...
Based on the current global situation due to the Covid 19 pandemic, what is the economic...
Based on the current global situation due to the Covid 19 pandemic, what is the economic effect of this pandemic on the overall real estate market performance in Malaysia? and the current issue facing this industry? write about 700-800 words.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT