Using seasonal relatives. Apple's Citrus Fruit Farm ships boxed fruit anywhere in the world. Using the following information, a manager wants to forecast shipments for the frst four months of next year ‘seasonal Seasonat Month Posto Month Palativo mn 12 08 Feb 3 on. 00 Ma 13 Sop. o7 Ae ‘4 Oct 10 ay. 03 Now an aun 07 Dec. 14 “The monthly forecast equation being used is: R=40+¥ whore fy = January of last year F, = Forecast of shipments for month ¢ ‘a. Determine tend amounts for the first four months of nest year: January, ¢ = 24; February. = 25: te. Thus, Fig = 402 + 3024) Fi = 402 + 325) Fru — 402 + 325) ~ 480 Frage = 402 + 327) = 483 'b. Multiply each monthly rend bythe corresponding seasonal relative for that month, ‘Seasonal Month Relative en 12 7a 2) = 5088 Feb. 13 A713) = 204 Mat 13 490g 3) = 240 Ae 14 481.1) = 5813Linear trend line. Plot the data on a graph, and verify visually that a lincar trend line is appropriate. Develop a linear trend equation for the following data. Then use the equation to predict the next two values of the sesies. essauzswale 1 2 3 4 5 6 7 a 9 A plot of the data indicates that a linear trend line is appropriate: Demand 123456789 0N Period Period, Demand, t y y 1 1 4 “4 2 ‘ 2 104 8 ° 20 ‘50 Et= Gandy f= 285 4 6 4 zi 5 2% 8 278 6 38 5 330 7 4 © 2 8 6 Ea 448 4 so _$58 % 25 8 2.545 5 — My = By _ 92,545) ~ 45488) _ | 25 mS? — (En? 9(285) — 4545) “ aoe 4547 ‘Thus, the trend equation is Fi = 45.47 + 1.75t. The next two forecasts are: Fig ~ 45.47 + 1.75(10) — 6297 Fir = 45.47 + 1.75(11) = 64.72‘Seasonal relatives. Obiain estimates of quarter relatives for these data using the centered moving average method: YEAR 1 2 3 4 12 39 ¢ 12 39 4 Dena: 14 13H ‘Note that each season has an even number of data points. When an even-numbered moving average is used (in this case, a four-period moving average), the “centered value” will not correspond to an actual data point; the center of 4 is between thesecond and third data points. To correct for this, asec ond set of moving averages must be computed using the MA, values. The MA2 values are centered between the MA, and “line up” with actual data points. For example, the fist MA, value is 28.25. It is centered between 18 and 35 (i.., between quarter 2 and quarter 3). When the average of the first two MA, values is taken (i. MA;) and centered, it lines up with the 35 and. hence. with quarter 3. ‘So, whenever an even-numbered moving average is used as a centered moving average (e.e., MA, MA,2), a second moving average, a two-period moving average, is used to achieve correspon- ‘dence with periods. This procedure is not needed when the number of periods in the centered moving average is odd. Year ‘Quarter Dema MA, Demand/MAz_ 1 1 1% 2 8 2025 3 Ey 3175 a0 147 4 4 2825 3400 135 2 1 6 250 nat a7 2 2 4975 4568 070 3 0 5800 sae 18 4 1 5750 5525 120 3 1 4 6350 e150 oz 2 oe era e263 owe 2 o 7100 oa 124 4 © 4 1 se QUARTER 2 3 a78 17 1 ose 118 te tet 421 26 258 ‘eager he quarter: ors ans 1187 1320 ‘The sum of these relatives is 4.037. Multiplying each by 4.00/4.037 will standardize the relatives, making their total equal 400. The resulting relatives are quarter |, .71%; quarter 2.798: quarter 3, 1.176; quarter 4, 1.308.Regression line. & large midwestern reiailer has developed a graph that summarizes the effect of advertising expenditures or sales volume. Using the graph, determine an equation of the form y= a + bx hat describes this relationshiy 2 4 6 8 0 xe Advertising (S thousands} ‘The linear equation has the form y = a + bx, where a is the value of y when x = 0 (i.e, where the fine intersects the y axis) and b isthe slope of the line (the amount by which y changes for a one-unit change in). Accordingly, a= | and b = (3 — 1)(10 ~ 0) = 2,soy =a + br becomes y = 1 + 2x. [Note (G = 1) is the change in y, and (10 — 0) is the change in x] Reguession anatysis. The owner of a small hardware store has noted a sales pattem for window locks ‘that seems to parallel the number of break-ins reported each week in the newspaper. The data are: Sales: oe 6 m 2 7 4 & FT Break ins: 9 3 3 § 4 7 2 6 4 Plot the data to determine which type of equation, linear or nonlinear, is appropriate Obtain a regression equation for the data, cc. Estimate average sales when the number of break-ins is five. s ° L L L L L 2 4 6 & 10 Number of break-ins ‘The graph supports a linear relationship.1b. You can obtain the regression coefficients using the appropriate Excel template. Simply replace the existing data for x and y with your data. Note: Be careful to enter the values for the variable ‘you want to predictas y values. In this problem, the objective is to predict sales, so the sales val- ues are entered in the y column. The equation is y, = 7.129 + 4.275x. Forcnt S RES berlin “bn? “peas