Math Solutions

[See Steps] Tyler Jones has just been hired as the new production manager at the Sundance Chemical Company. As his first assignment, he has been asked to

Question: Tyler Jones has just been hired as the new production manager at the Sundance Chemical Company. As his first assignment, he has been asked to prepare a demand forecast for the next period (Period 51).

He has been provided the following data:

Period Actual Period Actual Period Actual Period Actual Period Actual
1 398 11 424 21 456 31 474 41 477
2 400 12 429 22 457 32 476 42 472
3 403 13 434 23 458 33 478 43 466
4 408 14 436 24 457 34 484 44 460
5 410 15 437 25 462 35 489 45 451
6 412 16 442 26 463 36 488 46 443
7 414 17 445 27 467 37 486 47 439
8 415 18 447 28 468 38 485 48 432
9 413 19 448 29 470 39 483 49 426
10 418 20 454 30 473 40 482 50 419

Tyler has just completed the same MBA 626 class that you are now taking. He only has the forecasting models that we have studied in this course. Help Tyler develop a forecast for Period 51 using one of those models.

  1. Explain and justify why you selected the model that you used.
  2. What is the forecast for Period 51?
    Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
    Intercept 376.2183 4.555405 82.58723 1.56E-52 367.054 385.3825 367.054 385.3825
    t 6.053475 0.412064 14.69063 3.44E-19 5.22451 6.882439 5.22451 6.882439
    t^2 -0.09554 0.007833 -12.1972 3.62E-16 -0.1113 -0.07978 -0.1113 -0.07978

    This gives a reasonable R 2 = 0.8526. The forecast in this case for period 51 is 436.44.
    To compute the MAD we have the following table:
    RESIDUAL OUTPUT
    Observation Predicted Actual Residuals Abs. Deviation
    1 382.1762 15.8238 15.8238
    2 387.9431 12.05695 12.05695
    3 393.5188 9.481179 9.481179
    4 398.9035 9.09649 9.09649
    5 404.0971 5.902884 5.902884
    6 409.0996 2.900359 2.900359
    7 413.9111 0.088916 0.088916
    8 418.5314 -3.53144 3.531445
    9 422.9607 -9.96072 9.960724
    10 427.1989 -9.19892 9.198921
    11 431.246 -7.24604 7.246037
    12 435.1021 -6.10207 6.102071
    13 438.767 -4.76702 4.767023
    14 442.2409 -6.24089 6.240893
    15 445.5237 -8.52368 8.523681
    16 448.6154 -6.61539 6.615388
    17 451.516 -6.51601 6.516013
    18 454.2256 -7.22556 7.225555
    19 456.744 -8.74402 8.744017
    20 459.0714 -5.0714 5.071396
    21 461.2077 -5.20769 5.207693
    22 463.1529 -6.15291 6.152909
    23 464.907 -6.90704 6.907043
    24 466.4701 -9.47009 9.470095
    25 467.8421 -5.84206 5.842065
    26 469.023 -6.02295 6.022953
    27 470.0128 -3.01276 3.01276
    28 470.8115 -2.81148 2.811484
    29 471.4191 -1.41913 1.419127
    30 471.8357 1.164312 1.164312
    31 472.0612 1.938832 1.938832
    32 472.0956 3.904435 3.904435
    33 471.9389 6.061119 6.061119
    34 471.5911 12.40889 12.40889
    35 471.0523 17.94773 17.94773
    36 470.3223 17.67766 17.67766
    37 469.4013 16.59867 16.59867
    38 468.2892 16.71077 16.71077
    39 466.9861 16.01394 16.01394
    40 465.4918 16.5082 16.5082
    41 463.8065 13.19354 13.19354
    42 461.93 10.06996 10.06996
    43 459.8625 6.137463 6.137463
    44 457.604 2.396047 2.396047
    45 455.1543 -4.15429 4.154287
    46 452.5135 -9.51354 9.513539
    47 449.6817 -10.6817 10.68171
    48 446.6588 -14.6588 14.6588
    49 443.4448 -17.4448 17.4448
    50 440.0397 -21.0397 21.03973
    MAD 8.563286

    The MAD is then 8.56.
  3. How good or strong is the method that you used? Explain.

Price: $2.99
Solution: The downloadable solution consists of 6 pages
Deliverable: Word Document


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