A new production manager for a hardware company needs to find the best forecasting technique for...

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A new production manager for a hardware company needs to find the best forecasting technique for their line of electric drills. They have collected data regarding sales over 12 years, the price/unit, and advertising expenditures/year. They want to deploy time series techniques as well as "causal" models using multiple regression to decide which can predict/forecast sales for next year. They would like to minimize forecasting errors: bias, MAD, MSE, RMSE, MAPE, and tracking signal. Year Sales/unit (Thousands) Advertising ($000) 123 4 1,300 5 1,150 6 1,200 7 8 9 10 11 400 700 900 12 900 1,100 980 1,234 925 800 Price/Unit 280 215 211 210 215 200 225 207 220 211 227 245 600 835 1,100 1,400 1,200 1,300 900 1,100 700 900 700 690 1. Use exponential smoothing (ES) with a=0.8 and make a forecast for periods 2-13. 1. Forecast for periods 2-13 using ES and a=0.80. 2. Plot sales and the forecasted values on the same figure using ES. Provide some commentary based on what you see. 3. Calculate: bias, MAD, MSE, RMSE, MAPE, and track tracking signal. Also, plot the tracking signal and comment on what you see on the plot. Please show your work and explain how you arrived at your answer. A new production manager for a hardware company needs to find the best forecasting technique for their line of electric drills. They have collected data regarding sales over 12 years, the price/unit, and advertising expenditures/year. They want to deploy time series techniques as well as "causal" models using multiple regression to decide which can predict/forecast sales for next year. They would like to minimize forecasting errors: bias, MAD, MSE, RMSE, MAPE, and tracking signal. Year Sales/unit (Thousands) Advertising ($000) 123 4 1,300 5 1,150 6 1,200 7 8 9 10 11 400 700 900 12 900 1,100 980 1,234 925 800 Price/Unit 280 215 211 210 215 200 225 207 220 211 227 245 600 835 1,100 1,400 1,200 1,300 900 1,100 700 900 700 690 1. Use exponential smoothing (ES) with a=0.8 and make a forecast for periods 2-13. 1. Forecast for periods 2-13 using ES and a=0.80. 2. Plot sales and the forecasted values on the same figure using ES. Provide some commentary based on what you see. 3. Calculate: bias, MAD, MSE, RMSE, MAPE, and track tracking signal. Also, plot the tracking signal and comment on what you see on the plot. Please show your work and explain how you arrived at your answer.

Answer rating: 100% (QA)

1 Forecast for periods 213 using ES and a08 Period Actual Forecast 1 400 400 2 700 560 40002 70008 3 ... View the full answer