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Accounting Forecasting Summer Demand Using Essay

This is shown in table 1. Table 1; Calculations to create the index

1

2

3

4

Month

Average

Year 1

Year 2

Year 3

Year 4

1

39,600

0.45

1.14

1.51

0.90

2

37,080

0.53

1.25

0.83

1.38

3

30,000

0.52

0.74

1.59

1.15

4

59,210

0.91

0.70

1.25

1.15

5

64,375

1.29

0.71

0.94

1.06

6

57,750

1.26

0.72

0.96

1.06

7

47,370

1.17

0.84

0.68

1.32

8

56,638

1.01

1.13

0.68

1.17

9

29,855

0.52

1.59

0.84

1.05

10

39,638

0.70

1.09

1.29

0.92

11

27,323

0.78

1.44

1.16

0.61

12

19,350

0.88

0.53

1.61

0.98

With the creation of the index for each moth, this may then be used to assess the most likely demand. The most appropriate method is the use of the least square regression. This uses the data from the previous years and places them on a graph, drawing a straight line through the points so it has the least distance from the different points. The future forecasts are assumed to be on this line. The equation for the line can be used to calculate forecasts. The graph for month 1 is shown below in figure 1.

Figure 2; Graph for Month 1 demand

The line shows the general trend and is the closest the line can be drawn to all...

In Excel it is possible for the program to calculate the slope of the lie with an equation, for month 1 the equation is y = 0.1697x+0.5758, x will be the period for which the forecast (y) is being calculated. This gives a result of 1.42. The index level form month 1 is forecast at 1.42, this may then be converted to the actual amount by multiplying the index by the base line (Shmueli, 2012). This can be repeated for each month
. This gives the forecast demand shown in table 2.

Table 2; Forecast demand for year 5

Month

Forecast for year 5 (index)

Mean for the month

Actual units forecast

1

1.42

39,600

56,400

2

1.53

37,080

56,720

3

1.68

30,000

50,450

4

1.32

59,210

78,145

5

0.88

64,375

56,600

6

0.90

57,750

52,250

7

1.07

47,370

50,790

8

1.01

56,638

57,125

9

1.21

29,855

36,210

10

1.22

39,638

48,300

11

0.81

27,323

21,995

12

1.34

19,350

25,900

Total

590,885

Now the business has a total breakdown of the forecast for each month and the total for the year. It is unlikely to be totally accurate, as the demand lines were not straight and showed some volatility, but will give a good basis for forecasting.

References

O'Connell, Richard; Koehler, Anne, (2004), Forecasting, Time Series, and Regression, South Western Collage Publishers

Shmueli, G, (2012), Practical Time Series Forecasting: A Hands-on Guide, CreateSpace Independent Publishing Platform

The forecast function in Excel prevents…

Sources used in this document:
References

O'Connell, Richard; Koehler, Anne, (2004), Forecasting, Time Series, and Regression, South Western Collage Publishers

Shmueli, G, (2012), Practical Time Series Forecasting: A Hands-on Guide, CreateSpace Independent Publishing Platform

The forecast function in Excel prevents the need for drawing the graph
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