Question

You and your partner have developed an all natural energy drink and test marketed on campus with the following sales results. Month4 Month1 350 Month2 750 Month3 650 Month5 1000 Month6 1150 950 Based on these results you are developing a forecast for investors for the next 6 months. What forecast would you recommend? L Enter M for moving average, E for exponential smoothing and L for linear regression Provide your forecast for months 7-12 (Round up to the nearest whole number) Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Answer 1

Answer: Use linear regression for the forecast as exponential smoothing can just produce forecast for the following period (not 6 periods after)

Forecast linear regression, the trendline equation is y = 144.29x + 303.33

Explanation:

• linear trend forecast- select the period and demand and insert a X-Y chart. Show trend line equation. To find forecast, replace the value of x in the equation with period no. and find the value of Y.

linear regression 1400 1200 y = 144.29x + 303.33 1 2 3 4 5 6 7

Answer b: For forecast of 7^th period, keep x= 7

F7 = 144.29*7 + 303.33= 1313

Similarly,

Month	Actual demand	Forecast linear regression, y = 144.29x + 303.33
1	350
2	750
3	650
4	950
5	1000
6	1150
7		1313
8		1458
9		1602
10		1746
11		1891
12		2035