Running head: FORECASTING WITH INDICES

Forecasting with Indices Travis Steiner University of Phoenix Quantitative Reasoning for Business QRB/501 Dr. Nathaniel Litton August 28, 2011

FORECASTING WITH INDICES Forecasting with Indices Forecasting is a method used by companies to predict current and future trends. Many companies realize that this is the backbone of the company because it predicts whether or not a company will break even and or if they do not break even, what the project statistics are for the following year. An index is a point reference concerning numbers with common points. Indices are used to observe historical and short-term comparisons with percentages change commonly used. This weeks lesson entailed obtaining the Summer Historical Inventory Data from the materials area in the week two forum and converting the information into an index. The time series information is to be used to forecast the inventory needed for the upcoming year. To give a company a better view of making decision a month-to-month forecast is best because more information can be obtained over a shorter period. The Summer Historical Data obtained from University of Phoenix Material was converted into an index using Microsoft excel software. The data showed typical demand for

summer highs using demands in units and the forecast was obtained by adding the first four years by months and dividing them by the four years to arrive at the forecast for the following year. In conclusion, forecasting is vital to any organizations growth. Without forecasting a company has no knowledge of the trends of sales. With proper forecasting a company knows when sales will increase or decrease thereby knowing how to schedule employees, order inventory or decrease the ordering of inventory. If more employees are needed this may also mean that more management staff and equipment is needed to ensure the company functions appropriately. As stated above, forecasting is the backbone of any successful organization.

FORECASTING WITH INDICES Month year 1 year 2 year 3 year 4 Forecast 1 18,000 45100 59800 35500 39600 2 19,800 46530 30740 51250 37080 3 15,700 22100 47800 34400 30000 4 53,600 41350 73890 68000 59210 5 83,200 46000 60200 68100 64375 6 72,900 41800 55200 61100 57750 7 55,200 39800 32180 62300 47370 8 57,350 64100 38600 66500 56637 9 15,400 47600 25020 31400 29855 10 27,700 43050 51300 36500 39637 11 21,400 39300 31790 16800 27322 12 17,100 10300 31100 18900 19350

FORECASTING WITH INDICES References

Summer Historical Inventory Data QRD/501 Version 2, University of Phoenix Material. Retrieved August 29, 2011. From qrb501_ r2_ university_ of_phoenix_ material_ summer_ historical_ inventory_ data (1)