Forecasting Case Analysis



Enterprise Industries produces Fresh, a brand of liquid detergent. In order to more effectively manage its inventory, the company would like to better predict demand for Fresh. To develop a prediction model, the company has gathered data concerning demand for Fresh over the last 60 sales periods. Each sales period is defined as one month. The variables are as follows:

Demand = Y = demand for a large size bottle of Fresh (in 100,000)
Price = the price of Fresh as offered by Ent. Industries
AIP = the average industry price
ADV = Ent. Industries Advertising Expenditure (in $100,000) to Promote Fresh in the sales period.
DIFF = AIP – Price = the “price difference” in the sales period

1. Make time series scatter plots of all five variables (five graphs). Insert trend line, equation, and R-squared. Observe graphs and provide interpretation of results.

2. Obtain the correlation matrix for all six variables and list the variables that have strong correlation with Demand. High correlation is r > 0.70. Explain your findings in plain language.

3. Use 3-month and 6-month moving averages to predict the demand for January 2021. Find MAD for both forecasts and identify the preferred one based on each calculation. Is the moving average suitable method for forecasting for this data set? Explain your reasoning.

4. Use Exponential smoothing forecasts with alpha of 0.1, 0.2, …, 0.9 to predict January 2021 demand. Identify the value of alpha that results in the lowest MAD.

5. Find the monthly seasonal indices for the demand values using Simple Average (SA) method. Find the de-seasonalized demand values by dividing monthly demand by seasonal indices.

6. Use regression to perform trend analysis on the de-seasonalized demand values. Is trend analysis suitable for this data? Find MAD, the seasonally adjusted trend forecasts for January through March 2021 and explain the Excel Regression output (trend equation, r, r-squared, goodness of model).


Sample Solution

The purpose of this report is to explore the concept of leadership and present the characteristics of good leadership as outlined within the contemporary literature. A variety of leadership theories will be discussed in order to understand and draw a conclusion with regards to feasibility and application of those theories in organisations nowadays.

In order to outline the characteristics of good leadership it is vital to understand the concept itself. According to Rees and French (2016) leadership is difficult to clearly define as it depends on individual perception. What leadership means to one person may be understood differently by somebody else. Bertocci D. (2009) adds that leadership definition changes with time depending on current events and is often derived from the image of political leaders. Stogdill R. & Bass B (1990) define leadership as a process of influencing people in order to achieve a mutual goal. Similarly, Gibson, Ivancevich, Donnelly & Konopaske (2012) state that leadership is ‘an attempt to use non-coercive influence to motivate individuals to accomplish some goal’. What is more, Kotter (1999) approaches leadership as creating a vision and empowering people to achieve this vision by aligning strategies. All of the above was synthesised by Dean Amory in 2014 where he states that leadership equals influence therefore factual leaders are the ones who have the most influence on others. Even though the perception of leadership changes over time, it is understood and agreed that leadership involves influencing others by motivating them to achieve set goals or visions.

Different leadership theories can assist in establishing features of a good leader. Equally to definitions of leadership, these theories evolve over time as there are many external and internal factors influencing those changes.

Derived from Aristotelian philosophy, historian Thomas Carlyle drew a ‘Great Man’ theory based on the fact that great leaders do not acquire or learn their leadership skills, instead they are born with them (Forsyth D., 2009). According to Marquis and Huston (2009) this theory was a base to other theories until 1940s, it also confirms that equally as some individuals are born to lead others, some are simply born to be led. In order to establish and understand traits of great leaders the study of the most followed leaders, both in historical and current context, needs to be carried out. Carlyle in his work ‘On heroes, hero worship and the heroic in history’ (1888) links great men such as Mahomet, Shakespeare or Napoleon to concept of hero. What is more, he produces that history of the world is nothing else than ‘biography of great men’. Stogdill R. & Bass B (1990) add John F. Kennedy and Martin Luther King to the great leaders list. According to Daft R. (2007) great leaders has always been thought of as men and were in possession of ‘natural abil