Res 342 Simulation Memo

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BLUE’S INC.

To: Myra Reid, VP Production

From: Mary Adams

Date: December 18, 2011

Subject: Sales Forecast

      As it is known that an accurate forecast and precise corporate decisions are essential for continued success with in an organization and this conception goes as well for Blue’s Incorporated.   An accurate forecast was sustained after a period of three weeks to arrive at a decision about the impending sales forecast for the business.

      Blue’s Incorporated is predestined to grow into the industry frontrunner of denim products. As Market Analyst a resolution was prepared to modify the existing advertising budget.   Modifications to the advertising budget will permit Blue’s Incorporated to develop the brand name and get it out to the world. The aim of allowing Blue’s Incorporated a time to shine is at hand (Applying ANOVA and Non-Parametric Tests, 2003).

      In week one, the assignment is to predict the advertising budget. Having an advertising strategy will help in the success of becoming an industry leader. I used the regression equation to set the budget and selected the competitor’s advertised budget as the independent variable. I believe that I ought to have selected sales as a variable for the regression analysis, since it has a higher correlation coefficient than the competition’s budget. The ideal decision would have been to use sales as a variable for forecasting the budget.

      During week two, the assignment was to study fluctuations in the market size and decide on a sales forecast. I used the simple moving average model, but ought to have used the 2-period weighted moving average with a weight of 0.9 for the most recent observation. So my choices were ok but not ideal. The responsibilities comprised of reviewing the average model, k-period for the average model and the production level. A weighted moving average was selected, along with 2 (k-period). This decision could lead to having a negative impact on... [continues]

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