2. The quarterly sales for Grinder Inc are as follows: Period Sales ($M) 2014 96 2015...

2. The quarterly sales for Grinder Inc are as follows:

Period Sales ($M)
2014 96
2015 106
2016 100
2017 115
2018 122
2019 120
2020 ???

• Calculate and fit the best straight line to the points using linear regression.
• Using the data for trend forecast, estimate the sales for 2020.
• Estimate the forecast error.
• Show on the graph the regression line, the forecasted sale, and the forecast error.

Expert Solution

Answer

The exponential smoothing forecasting method is used here which is given as

Ft = Alpha*At-1 +(1-Alpha)*Ft-1

Using this we calculated the demand forecast for 2020 which comes out to be 108.6 or 109 as below

PERIOD	Actual SALES	FORECCAST SALE	ERROR
2014	96	96	0
2015	106	96	10
2016	100	98	2
2017	115	98.4	16.6
2018	122	101.72	20.28
2019	120	105.776	14.224
2020		108.6208

For your data, the regression equation for Y is:

ŷ = 5.22857X - 10433.58095

Calculation Summary

Sum of X = 12099
Sum of Y = 659
Mean X = 2016.5
Mean Y = 109.8333
Sum of squares (SSX) = 17.5
Sum of products (SP) = 91.5

Regression Equation = ŷ = bX + a

b = SP/SSX = 91.5/17.5 = 5.22857

a = MY - bMX = 109.83 - (5.23*2016.5) = -10433.58095

ŷ = 5.22857X - 10433.58095

SS: 17.5

SP: 91.5

Rahul Sunny answered 2 years ago

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