Shoemax Case

1.) ShoeMax is a shoe company that mainly specializes in manufacturing athletic shoes. The company was created in 1984 and is headquartered in Houston, Texas. The demand of the shoes the company produces has always been steady with some periods with high sales and others not that high, but they also use forecasting techniques in order to prepared for demand. The company knows that is essential to understand the market demand to know how much product they need to produce. The company does not want to produce more product than there is demand for because of the costs of having extra inventory in storage and production cost. Considering all of this the company mostly uses the Simple moving average technique to forecast the demand of a certain type of shoe. This forecasting technique is helpful to make demand predictions because is fairly simple to use. In this technique the closing price for a number of periods is added and then divided by the total number of periods. For example, lets say the company had closing prices for a 6 month period for one of their most popular shoes of $1400,$1500,$1605,$1678,$1700, and $1266 we would take the sum which is $7,883 and divide it by 6 which is $1,313. With this result the company can see the average sales for the six month period ($1,313) and therefore they would have an idea of how much demand they will have for the next six month period.
The Mean Absolute Deviation takes the average of forecasted values and actual values. This is an important method because it calculates the accuracy of a