ARIJIT MONDAL (Final Assignment)

8/4/2019 ARIJIT MONDAL (Final Assignment)

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ARIJIT MONDAL

M.B.A. (2nd Semester, Sec-A, Roll No- 10)

Assignment on Demand Forecasting:

Calculate the Forecasted Sales for the year (2005 to 2010):

For calculating the Forecasted Sales for the year (2005 to 2010), we need to

calculate the following steps:

4-Quarter Moving Average.

Central Moving Average.

Specific Seasonal Index.

Seasonal Index.

Deseasonalized Demand.

Calculation of Trend line (T) parameter.

Cyclical Component (C) Analysis.

Random Component (R) Analysis.

Sales figures in crore Rs.

Year Q1 Q2 Q3 Q4

1998 40 25 15 30

1999 38 26 13 28

2000 13 22 18 33

2001 45 29 14 30

2002 41 26 18 29


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Trend (T) refers to long-term growth or decline in average level ofdemand.Business-cycle(C) refers to large deviation of actual demand values fromexpected (trend line) due to complex environment influences. Randomcomponent (R) is the irregular residual in the demand due to manycomplex random forces in the environment.

Multiplicative Model: Y=T.C.S.R.

Calculation for 4-Quarter Moving Average:

4-quareter moving average is the average of four sales quarters during theperiod.Example:

24.75= (20+32+22+25)/4

23.5= (32+22+25+15)/4

& so on.

Variation Estimation of Actual Demand &4-Quarter Moving Average:

Blue Dots= Actualdemand.

Red Dots= AverageDemand.

** Data collected from table1 forthe graph.

year

Quart

er Sales

4-Qtr Moving

Avg2000 Q1 20

Q2 32

24.75

Q3 22

23.5

Q4 25

21.75

2001 Q1 15

25.25

Q2 2526.75

Q3 36

Q4 31


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Calculation for Central Moving Average:

Central moving average is the average of 4-quarter moving average during

the period.Example:

24.125= (24.75+23.5)

22.625= (23.5+21.75)

& so on..

Variation Estimation of Actual Demand & 4-Quarter Moving Average &Central Moving Average:

Green Dots= Central

Moving Average.

**Data collected from Table1 for

the graph.

yearQuarter Sales

4-QtrMoving Avg

CentralMoving Avg

2000 Q1 20

Q2 32

24.75

Q3 22 24.12523.5

Q4 25 22.625

21.75

2001 Q1 15 23.5

25.25

Q2 25 26

26.75

Q3 36

Q4 31


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Calculation for Specific Seasonal Index:

To calculate Specific Seasonal Index,

Specific Seasonal Index : = (Actual Demand / Central Moving Average.)

Example:

0.912= 22/24.125

1.105= 25/22.625

& So on

Variation Estimation of SpecificSeasonal Index:

**Data collected from Table1 forthe graph.

yearQuarter

Sales

4-QtrMoving Avg

CentralMovingAvg

SpecificSeasonalIndex

2000 Q1 20

Q2 3224.75

Q3 22 24.125 0.912

23.5

Q4 25 22.625 1.105

21.75200

1 Q1 15 23.5 0.638

25.25

Q2 25 26 0.962

26.75

Q3 36

Q4 31


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Calculation for Seasonal Index:

Following process

has to be taken for

calculating of

Seasonal index:

With respective years & quarters, the figures are taken.

Identify the maximum and minimum fluctuations with respectivequarters.

Omit the maximum and minimum figures for each quarter.

Calculation of modified sum.

Calculation of modified mean.

Total of all modified mean of all quarters.

Calculate Adjacent constant (e= 4/total of the modified mean).

Year Q1 Q2 Q3 Q4199

8 0.551.10

5

1999 1.407

0.981 0.562

1.435

2000

0.662

1.053 0.705

1.086

2001

1.463 0.97 0.482

1.066

2002 1.451

0.908

Maximum

fluctuation.

Minimum

fluctuation.

Modifiedsum 2.858

1.951

1.112

2.191

Modifiedmean 1.429

0.976

0.556

1.096

TotalModifiedMean 4.056Adjustmentconstant=

0.986193

Quarter

ModMean

Adjucont.

Seasonalindex

Q11.42

90.98619

33 1.409

Q2

0.97

55

0.98619

33 0.962

Q30.55

60.98619

33 0.548

Q41.09

60.98619

33 1.080


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Use the adjacent constant together with modified mean to calculateseasonal index (SI).

GraphShowing the Seasonal Index :

Blue Dots= Seasonal Index.

**Data taken from table1 for the seasonalindex graph

Graph Showing the Seasonal Index, Actual demand & 4-Quarter moving

central:

SI= (modified mean of each quarter * adjustingconstant)


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**Data taken from Table1 for the graph.

Calculation for Deseasonalized demand:

Deseasonalized demand (TCSR/S) = (Actual Demand / Seasonal Index)

Example:

1.762=50/28.38

1.347=35/25.99

& So on.

Variation estimation of Actual demand, 4-qtr moving average &

Deseasonalized Demand:

SalesSeasonalIndex(S) TCR=TCSR/S

50 28.38 1.762

35 25.99 1.347

45 27.36 1.645

55 27.77 1.981

25 26.96 0.927


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Red Dots= 4-qtr centerl average.

Blue Dots= Actual Demand.

Green Dots= De-seasonalized Demand.

**Data taken from Table1 for the Graph.

Calculation for Actual Trend Sales:Base year is 2002 as because it is in the middle year as total number of

year is uneven. When number of year is uneven should follow thefollowing formula.

X= (Base year current year)*2

So, is substracted from base year and not any value is considerd.

Number of year= n.

If Y=na + bX. (1)

Then, a= ( Y - bX)/n

a = Y/n (X=0)

IfXY= aX+bx2 (2)

Then, xy= (XY-aX)/X2

b= XY/x2 (X=0)


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Then calculate the Actual Sales Trend from (a+b*X).

Graph showing for the Actual Trend of Demand:

**Date taken from Table1 for Actual trend of demand.

Calculation for Cyclical Component Analysis:

The cyclical component(CR) is isolated by dividing TCR by T. Cyclicalcomponent c is created by avereage of thrre CR.

Example:

CR= TCR/Trend

C= avereage three CR.

Graph showing for Cyclical Component:

Sales TCR Trend CR "C"

50 28.38 25.25 1.124

35 25.99 25.43 1.022 1.071

45 27.36 25.61 1.068 1.056

55 27.77 25.80 1.077 1.061

25 26.96 25.98 1.038


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**Data taken from table1 for Cyclical Component.

Cyclical Component scatter plot formula = three quarter moving average of

CR.

Calculation for Random Component:

Random Component R = CR/C

Example:

0.95= 1.022/1.071

1.01= 1.068/1.056

& So on

Sales TCR Trend CR "C" "R"

50 28.38 25.25 1.124

35 25.99 25.43 1.022 1.0710.9

5

45 27.36 25.61 1.068 1.0561.0

1

55 27.77 25.80 1.077 1.0611.0

1

25 26.96 25.98 1.038


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Graph showing for Random Componnet:

**Data taken from Table1 for random component.

Calculation for ForecastedTrend Demand for the year(2005 to 2010):

Forecastd trend demand ; Y=(a+b*X).

YearQuarter

TimeCode "x"

Sales(y=a+b*x)

2005 Q1 37 30.38

Q2 39 30.56 Q3 41 30.74

Q4 43 30.93

2006 Q1 45 31.11

Q2 47 31.29

Q3 49 31.48

Q4 51 31.66

2007 Q1 53 31.84

Q2 55 32.03

Q3 57 32.21

Q4

59 32.39

2008 Q1 61 32.58

Q2 63 32.76

Q3 65 32.94

Q4 67 33.13

2009 Q1 69 33.31

Q2 71 33.49

Q3 73 33.68

Q4 75 33.86

2010 Q1 77 34.04

Q2 79 34.23

Q3 81 34.41

Q4 83 34.59

a=26.99,

b=0.0196


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Graph showing for Forecasted Trend Demand:

Table1:


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ARIJIT MONDAL (Final Assignment)

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