You are still a consultant for the Excellent Consulting Group. You have complete
ID: 3773745 • Letter: Y
Question
You are still a consultant for the Excellent Consulting Group. You have completed the first assignment, developing and testing a forecasting method based on linear regression (Case 3). However, your consulting manager at ECG wants to go the next step and investigate another forecasting method. It is important to do a thorough job for the client, and you have the expertise to analyze different forecasting methods. You have decided to look at the sales data for client’s lottery app as a single data set and use a time series analysis, namely SES, single exponential smoothing. Using Excel, use the forecasted sales from Case 3 to compute the MAPE, by doing the following: Case 3 Data Following are the data for website hits and app sales (number of the Lottery apps.)
Month Hits Sales
Jan 1200 420
Feb 820 545
Mar 1151 301
Apr 1050 510
May 1180 485
Jun 1047 525
Jul 1102 460
Aug 1054 500
Sep 1254 402
Oct 1071 584
Nov 1120 422
Dec 1287 514
Jan 1164 441
Feb 1159 ----
Mar 1298 ----
April ---- ----
IMPORTANT: Be sure to shift the monthly sales up by one month because the theory is that the hits predict the next month sales (e.g., the 1,200 hits in January are paired with February’s sales of 545). Therefore, your data will look like this:
Month Hits Sales
Jan 1200 545
Feb 820 301
Mar 1151 510
Apr 1050 485
May 1180 525
Jun 1047 460
Jul 1102 500
Aug 1054 402
Sep 1254 584
Oct 1071 422
Nov 1120 514
Dec 1287 441
Use the monthly hits for Jan through Mar to predict the sales for Feb through Apr. When you have done so, ask your Instructor to provide the data for the actual sales for Jan through Apr. 1. Calculate the MAPE for the first 12 months (assume the forecast for Month 1 – or January – is equal to January’s actual sales). Use 0.15 and 0.90 alphas. 2. Using the forecasted sales for Feb - April (taken from the Case 3 Linear Regression exercise), compute the MAPE by comparing actual sales for each month, or Y(t) to forecasted sales, or F(t). Compare this 3-month MAPE to the two MAPE values you calculated in your SES analysis above. Use the following table:
Month Sales, Y(t) Sales F(t) Y(t) - F(t) PE APE
February ? ? ? ? ?
March ? ? ? ? ?
April ? ? ? ? ?
? ? ?
ME MPE MAPE
Then write a report to your boss that briefly describes the results that you obtained. Using MAPE values, make a recommendation on which method appears to be more accurate -- SES or Linear Regression. Data: Use the data that you previously have generated from your analyses in Case 3
Explanation / Answer
In the every month the hits predict the next month sales. So, at some time this hits is return its actual sales.
Actual Forecast Jan 441 493.727 Feb 541 272.6822 Mar 529 462.0197 Apr 621 439.3717
ERRor 0.119562 0.495966 0.126617 0.292477
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