Case 5.1

1. A few recommendations would serve very useful to Mr. Perez for developing more precise sales forecasts. First, the same method should not be used for each of the chemical group’s division. Because the market is so different in each division, some techniques will not work for one division like it would for another. For example, a test market may work for a division with a brand new product, but it would not be as helpful or efficient for a division where there has been steady growth and established products for the past five years. The other suggestion I have would be to not begin the market analysis with reviewing the sales in each division of the company. If he would like to know more about the market, it would make more sense to use the build-up approach to conduct primary research. It would benefit the company because certain divisions are dependent on the oil market which ties into my last suggestion that he should gather statistics and forecast the standing of the crude oil market.
2. Each division requires its own specific type of forecasting method because of all of their unique circumstances. For the industrial intermediaries division, polymers and detergents each need a different method. Since the polymer intermediates sales have risen by a high number of 40% over a two year period and are unpredictable, an exponential smoothing method would be most appropriate. This method weights highest on the most recent years sales history. For the detergent intermediates, a moving average method would be most appropriate because sales have been stable overall in the past years. There is no need to give the most recent periods a higher weight of importance. For the specialty chemicals division, it would be most effective to complete an econometric model. Determining how drastically a change in the oil market would affect the sales in this division would be very helpful for the overall sales forecast. Finally, the bromine division should be forecasted using the