GNOMIAL FUNCTIONS, INC. CASE 14.2 Gnomial Functions, Inc. (GFI), is a medium-sized consulting firm in San Francisco that specializes in developing various forecasts of product demand, sales, consumption, or other information for its clients. To a lesser degree, it also has developed ongoing models for internal use by its clients. When contacted by a potential client GF usually establishes a basic work agreement with the firm's top management that sets out the general goals of the end product, primary contact personnel in both firms, and an outline of the project's overall scope (including any necessary time constraints for intermediate and final completion and a rough price estimate for the contract, Following this step, a team of GFI personnel is assembled to determine the most appropriate forecasting technique and develop a more detailed work program to be used as the basis for final contract negotiations. This team, which can vary in size according to the scope of the project and the client's needs, will perform the tasks that are established by the work program in conjunction with any personnel from the client firm who would be included in the team. Recently, GFI was contacted by a rapidly growing regional firm that manufactures, sells, and installs active solar water-heating equipment for commercial and residential applications. DynaSol Industries has seen its sales increase by more than 200 percent during the past 18 months, and it wishes to obtain a reliable estimate of its sales during the next 18 months. The company management expects that sales should increase substantially because of competing energy costs, tax-credit availability, and fundamental shifts in the attitudes of the regional population toward so-called exotic solar systems. The company also faces increasing competition within this burgeoning market. This situation requires mar strategic decisions concerning the company's future. When GF was contacted, DynaSol almost had reached the manufacturing capacity of its present facility, and if it wishes to continue growing with the market, it must expand either by relocating to a new facility entirely or by developing a second manufacturing location. Each involves certain known costs, and each has its advantages and disadvantages. The major unknown factors as far as management is concerned are growth of the overall market for this type of product and how large a market share the company would be able to capture Table 14.12 contains the preliminary information available to GFI on Dyna Sol's past sales Table 14.122 contains the preliminary information available to GFI on DynaSol's past sales. TABLE 14.12 DynaSol Monthly Sales for Period September 2018-February 2020 Month DynaSol Industries Sales, Units Sales Regional Market Sales, Units Sales 2018 September 24 $ 44,736 223 $ 396,048 October 28 52,192 228 404,928 November 31 59,517 230 408,480 December 32 61,437 422,564 231 2019 57,998 30 229 418,905 January 235 429.881 February 35 67197 240 439.027 78,621 March 39 265 484,759 40 80,637 April 281 529,449 43 86,684 May 298 561,479 94,748 June 47 314 680,332 51 110,009 July 78,621 240 439,027 April 40 80,637 265 484759 May 43 86,684 281 529,449 June 47 94,748 298 561,479 July 51 110,009 314 680,332 August 54 116,480 354 747,596 September 59 127,265 389 809,095 October 62 137,748 421 931,401 November 67 148,857 466 1.001.356 December 69 153,300 501 1,057,320 2020 January 74 161,121 529 1,057,320 February 79 172,007 573 1145, 264 Assignments 1. Given the information available and your Inowledge of different forecasting techniques, develop a recommendation for utilizing a specific forecasting technique in the subsequent study. The final Page 23 contract negotiations are pending, and so it is essential that you account for the advantages and disadvantages of your preferred technique as they would apply to the problem at hand and point out any additional information you would like to have