Hsm 260 Case Study

Forecasting
HSM/260
January 17, 2014
Janice Gilstorff

Forecasting
Exercise 9.1
Forecasting is a guess of what the financial future holds (production output or sales). In the scenario in the book exercise 9.1 they want you to forecast what the 20X5 figures would be. It does give you some background information, such as the Human services expenses over the past four years.
20X1 [$5,250,000]
20X2 [$5,500,000]
20X3 [$6,000,000]
20X4 [$6,750,000]
Weighted moving averages and moving averages, just use the data for the past three fiscal years. This would look like this
Moving Averages-
20X2 [$5,500,000]
20X3 [$6,000,000]
20X4 [$6,750,000]
20X5 [$6,083,000]
With just the three we already knew the total of $18,250,000. If you divide the total by three you get, $6,083,000.
From the information gathered a prediction for the forecast can be made.
Exponential smoothing:
The alpha method of 0.95 would work here. The formula would look like this: NF=LF + a (LD- LF)
Last Forecast (LF) = $6,300,000
Last Data (LD) =