A company turns polystyrene resin into recyclable/disposable containers for the food industry. Polystyrene is purchased as a commodity in the form of resin pellets. The resin is unloaded from bulk rail containers or overland trailers into storage silos. Making the food containers is a two-step process. First, resin is conveyed to an extruder, which converts it into a polystyrene sheet that is wound into rolls. The plastic comes in two forms -- clear and black. The rolls are either used immediately to make containers or are put into storage. Second, the rolls are loaded onto thermoforming presses, which form the sheet into containers and trim the containers from the sheet. The two manufacturing steps are shown in Figure 1. Over the past five years, the plastic packaging business has grown steadily. Demand for containers made from clear plastic comes from grocery stores, bakeries, and restaurants. Caterers and grocery stores use the black plastic trays as packaging and serving trays. Demand for clear plastic containers peaks in the summer months, whereas demand for black plastic containers peaks in the fall. Capacity on the extruders is not sufficient to cover demand for sheets during the peak seasons. As a result, the plant is forced to build inventory of each type of sheet in anticipation of future demand. Table 1 display historical quarterly demand for each of the two types of containers (clear and black). The team modified sales data by accounting for lost sales to obtain true demand data. Without the customers involved in this team, the company would never have known this information, as the company did not keep track of lost orders.

Forecasting
As a first step in the team’s decision making, it wants to forecast quarterly demand for each of the two types of containers for the years 2010 to 2012. Based on historical trends, demand is expected to continue to grow until 2012, after which it is expected to plateau. The manager must select the appropriate forecasting method and estimate the likely forecast error. Which method should she choose? Why? Using the method selected, forecast demand for the years 2010 to 2012.

Hint: You need to examine all four methods (moving average, simple exponential smoothing, Holt’s model, and Winter’s model) to see which one gives you the least errors (using measurements for forecasting errors, similar to the one we used for Tahoe salt example). Please submit 1 excel file containing 4 sheets for 4 methods.

If there is any way to attach or send the excel file so I can see the equations used so I can better understand how it's done that would be great!

 

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Table 1. Quarterly historical demand for clear and black plastic containers Black Plastic Clear Plastic Year Quarter Demand ('000 lb) Demand ('000 Ib) 2005 2,250 3,200 || 1,737 7,658 II 2,412 4,420 IV 7,269 2,384 2006 3,514 3,654 || 2,143 8,680 II 3,459 5,695 IV 7,056 1,953 2007 4,120 4,742 II 2,766 13,673 II 2,556 6,640 IV 8,253 2,737 2008 5,491 3,486 4,382 13,186 II 4,315 5,448 IV 12,035 3,485 2009 5,648 7,728 II 3,696 16,591 II 4,843 8,236 IV 13,097 3,316 Table 1. Quarterly historical demand for clear and black plastic containers Black Plastic Clear Plastic Year Quarter Demand ('000 lb) Demand ('000 Ib) 2005 2,250 3,200 || 1,737 7,658 II 2,412 4,420 IV 7,269 2,384 2006 3,514 3,654 || 2,143 8,680 II 3,459 5,695 IV 7,056 1,953 2007 4,120 4,742 II 2,766 13,673 II 2,556 6,640 IV 8,253 2,737 2008 5,491 3,486 4,382 13,186 II 4,315 5,448 IV 12,035 3,485 2009 5,648 7,728 II 3,696 16,591 II 4,843 8,236 IV 13,097 3,316