BA 357 Assignment 1: Forecasting Annual Demand With A Monthly Breakdown Group AssignmentBA 357 Assignment 1: Forecasting Annual Demand With A Monthly Breakdown Group Assignment

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General Instructions:

Assignment 1


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You are to create a set of annual demand forecasts for one year, 2015, using five different forecasting methods as specified later.  After reviewing your annual forecast and error values, pick one annual forecast to recommend and distribute the annual forecast into monthly forecasts using the multiplicative seasonal forecasting method.  Then, prepare a brief executive summary indicating which forecast method you recommend the company to use for its aggregate planning and your reasons for choosing it. This summary page is to include your recommended forecast results listed by monthly demand and with the annual total demand.  Additional pages of your spread sheet file will include a page for each of your five forecasts, an Error summary page which combines error values for all five forecasts and one page for Seasonal Distribution of your demand for your chosen forecast method.  Error and other analysis should be included on the page for each individual forecast as well.


A summary Excel template for the executive summary cover page is provided for your use in the Work Assignment 1 folder in Week 5 on Blackboard.



Your company has just acquired a new subsidiary that produces sun hats and swimsuits.  Each product requires about the same amount of labor, time, and materials. All of the managers at the acquired company quit without notice the day your company took possession. You are the person who has been assigned to run this acquisition. Since all of the managers quit, the only planning information you have is historical data, including monthly demand and average annual days of sunshine for the targeted market.


Your task is to a forecast for the total demand for one year, 2015. Because the demand in the past has seasonally varied from month to month, the production organization needs for you to break the final forecasted annual demand down into monthly values so that they can begin scheduling resources and making appropriate purchases of materials from the company’s suppliers.


You have demand and weather data for the last 10 years. Weather forecasters are predicting 198 days of sunshine in the relevant region for 2015.  Their weather forecasts have been accurate to plus or minus 10 percent in years past.  According to industry experts there is about a 25% chance that the patterns of global consumer demand for 2014 will hold in the future. However there is a 10% chance that demand will be much less (at least 30%) than predicted from previous patterns because of continuing low levels of consumer confidence. And there is a 65% possibility that demand will recover to pre 2014 trends.  This information is provided to help you with your executive summary and analysis.

Aggregate Demand Data 2005 – 2014


  2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
JAN 1393 1613 1615 1777 1920 2032 1912 2070 1901 1668
FEB 1551 1920 2107 1779 2220 2559 2627 2997 2529 1948
MAR 4572 5705 7204 7667 8159 8380 8742 11631 9671 8447
APR 9792 11301 12452 14938 13491 14064 16282 17966 18089 16799
MAY 9412 10000 9876 11023 13216 13500 15842 16587 16954 16500
JUN 2622 3243 3234 3513 3954 4479 4683 4641 4107 4745
JUL 1722 1910 2309 2400 2727 3021 2600 2730 2664 3224
AUG 1888 2272 2604 2736 3412 4101 4875 5182 4416 4905
SEP 3711 4464 4972 5633 6774 7191 9488 9795 8762 10602
OCT 1036 1016 1316 1485 1693 1943 2340 2487 2211 2589
NOV 2056 2600 2893 3297 3889 4014 4149 4364 4223 4671
DEC 1872 2123 2354 2076 2157 2592 3357 3938 3432 3920

Note that the copy of the tables are presented as text tables so you can copy and use them with Excel spreadsheet software without having to re-enter the data values.


  2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Annual Days of Sunshine 249 245 261 264 269 278 285 186 245 250



Requirements (60 points total):

§  An executive summary (5 points) that tells what forecast you are recommending, and why. Your justification should include qualitative and quantitative evidence to support your choice. The text content of this summary text is not to take more than a half sheet of paper.  The summary is to be accompanied below by a table containing the monthly forecast values and total annual demand forecasted by the method you are recommending.
Use the executive summary as your cover sheet – the first sheet of your assignment upload.


§  Five separate forecasts (8 points each) for 2015 using:

ü  A simple moving average. (You will choose the number of periods (years) to use.)

ü  A weighted moving average.   (Use the same number of periods as you SMA forecast and choose the weighting values for each period.)

ü  the linear regression analysis method using the causal factor (Days of Sunshine.)

ü  the exponential smoothing method (Choose a value for a)

ü  Trend Projection with Regression (Choose the best number of periods to use)

ü  Error Analysis should be included with each of your forecasts, at a minimum CFE, MAD and MAPE values.

§  For each method you should show:

ü  The method/formula you are using, including any constants/parameters used

ü  The spreadsheet used for the calculations.


§  Error Analysis (5 points)  One page in your spreadsheet should combine error values for all 5 forecast methods.

§  Seasonality (10 points) Choose one annual forecast to recommend and break the annual total into monthly forecast amounts using the multiplicative seasonality method.




Submission Requirements:

§  Your Excel submission file is to be in the following order:

o   Executive summary with the table of recommended forecast values on top. This summary is to include your name.

o   Spreadsheet for simple moving average

o   Spreadsheet for weighted moving average

o   Spreadsheet for the linear regression forecast of annual demand (Causal.)

o   Spreadsheet for exponential smoothing forecast of annual demand.

o   Spreadsheet for Trend Projection with Regression.

o   Spreadsheet for Error comparison

o   Spreadsheet showing results for seasonal distribution of your one, recommended forecast.

§  Each page must be clearly labeled as to its content (with the exception of the executive summary page whose template is provided.

§  Do not make the reader guess what you are doing – include appropriate explanations on each page (additional comment functions, titles, notes, graphs etc.).


Upload your completed Excel file in Blackboard by 11:59 pm PDT on Sunday, July 26th.  Assignments will be accepted up to one week late at a penalty of 25% (prior to grading.)



Suggestions and Tips:



  1. Start by copying the table of demand data into one page in the template, than calculate yearly totals and monthly averages for each year.
  2. Work in annual numbers where ever you are able.
  3. Use Excel functions such as average, sum, slope and intercept, to help you do your calculations.
  4. Build formulae so that you can easily change values to optimize your forecast.
  5. Make sure to mention both quantitative and qualitative analysis in your executive summary.
  6. Ask questions in the Assignment 1 discussion board.

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