Problem

To ensure that as many trial subscriptions to the 3-For-All service as possible are conver...

To ensure that as many trial subscriptions to the 3-For-All service as possible are converted to regular subscriptions, the marketing department works closely with the customer support department to accomplish a smooth initial process for the trial subscription customers. To assist in this effort, the marketing department needs to accurately forecast the monthly total of new regular subscriptions.

A team consisting of managers from the marketing and customer support departments was convened to develop a better method of forecasting new subscriptions. Previously, after examining new subscription data for the prior three months, a group of three managers would develop a subjective forecast of the number of new subscriptions. Livia Salvador, who was recently hired by the company to provide expertise in quantitative forecasting methods, suggested that the department look for factors that might help in predicting new subscriptions.

Members of the team found that the forecasts in the past year had been particularly inaccurate because in some months, much more time was spent on telemarketing than in other months. Livia collected data (stored in ) for the number of new subscriptions and hours spent on telemarketing for each month for the past two years.

What criticism can you make concerning the method of forecasting that involved taking the new subscriptions data for the prior three months as the basis for future projections?

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