The Fresh Detergent Case Analysis Essay
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The Fresh Detergent Case Analysis Essay
Forecasting Case Analysis
MGT 3332
Fall 2017
Important Notice: All team members must do all parts of the project and compare results. DO NOT divide up parts of the project as many parts are related. Teams must submit a copy of Word file and Excel file of their work through Blackboard Dropbox. Do not submit any file until all team members agree on the deliverables. Only one team member will submit the files. There is no second chance on submittal.
The Fresh Detergent Case
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 33 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- Download the data from Course Blackboard site into Excel spreadsheet.
2- 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.
3- Construct scatter plots of Demand vs. DIFF and Demand vs. ADV, Demand vs. AIP, and Demand vs. Price. Insert fitted line, equation, and R-squared. Observe graphs and provide interpretation. Note that Demand is always on the Y axis.
4- Obtain the correlation matrix for all six variables and list the variables that have strong correlation with Demand. High correlation is r > 0.50. Explain your findings in plain language.
5- Use 3-month and 6-month moving averages to predict the demand for October 2017. 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.
6- Use Exponential smoothing forecasts with alpha of 0.1, 0.2, …, 0.9 to predict October 2017 demand. Identify the value of alpha that results in the lowest MAD.
7- 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.
8- Use regression to perform trend analysis on the de-seasonalized demand values. Is trend analysis suitable for this data? Find MAD and explain the Excel Regression output (trend equation, r, r-squared, goodness of model).
9- Find the seasonally adjusted trend forecasts for October through December 2017.
10- Perform simple linear regression analysis with ADV as the independent variable to predict demand. Write the complete equation, find MAD and explain the Excel Regression output. Make sure to use the de-seasonalized demand data for this model and all future models.
11- Repeat part (10) with DIFF as the independent variable.
12- Construct multiple linear regression model with Period, AIP, DIFF, and ADV as independent variables. Formulate the equation, find MAD, and explain the output. Rank variables based on their degree of contribution to the model. Observe significant F, R-squared, and p-values and explain.
13- Perform multiple linear regression analysis with Period, DIFF, and ADV as independent variables. Formulate the equation and find MAD. Which variable is the most significant predictor of demand? Rank the independent variables based on their degree of contribution to the model. Observe significant F, R-squared, and p-values and explain.
14- Use the model obtained in parts 13 and make forecasts for the following months. Make sure to seasonalize final forecasts.
Period Price AIP ADV
Oct. 2017 $7.10 $7.65 $10.3
Nov. 2017 $7.15 $7.70 $10.7
Dec. 2017 $7.30 $7.95 $11.0
15- Provide a case conclusion based on above analysis.
Grading Criteria
Completeness/Correctness 70%
Quality of Interpretations/Analysis 20%
General Quality of Report/graphs/writing 10%
Due Date: Sunday October 8, 2017
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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