Module 2 – Case
LINEAR REGRESSION AND SIMPLE EXPONENTIAL SMOOTHING (SES) FORECASTING
Assignment Overview
Scenario: You are a consultant who works for the Diligent
Consulting Group. Your client, the New Star Grocery Company, believes that
there may be a relationship between the number of customers who visit the store
during any given month (“customer traffic”) and the total sales for that same
month. In other words, the greater the customer traffic, the greater the sales
for that month. To test this theory, the client has collected customer traffic
data over the past 12-month period, and monthly sales for that same 12-month
period (Year 1).
Case Assignment
Using the customer traffic data and matching sales for each
month of Year 1, create a Linear Regression (LR) equation in Excel, assuming
all assumptions for linear regression have been met. Use the Excel template
provided (see “Module 2 Case – LR –Year 1” spreadsheet tab), and be sure to
include your LR chart (with a trend line) where noted. Also, be sure that you
include the LR formula within your chart.
After you have developed the LR equation above, you will use
the LR equation to forecast sales for Year 2 (see the second Excel spreadsheet
tab labeled “Year 2 Forecast”). You will note that the customer has collected
customer traffic data for Year 2. Your role is to complete the sales forecast
using the LR equation from Step 1 above.
After you have forecast Year 2 sales, your Professor will
provide you with 12 months of actual sales data for Year 2. You will compare
the sales forecast with the actual sales for Year 2, noting the monthly and
average (total) variances from forecast to actual sales.
To complete the Module 2 Case, write a report for the client
that describes the process you used above, and that analyzes the results for
Year 2. (What is the difference between forecast vs. actual sales for Year 2—by
month and for the year as a whole?) Make a recommendation concerning how the LR
equation might be used by New Star Grocery Company to forecast future sales.
Data: Download the Module 2 Case template here: Data chart
for BUS520 Case 2. Use this template to complete your Excel analysis.
Assignment Expectations
Excel Analysis
Conduct accurate and complete Linear Regression analysis in
Excel. Use Excel support to find information on linear regression in Excel:
https://support.office.com/en-us/Search/results?query=linear+regression
Written Report
Length requirements: 4–5 pages minimum (not including Cover
and Reference pages). NOTE: You must submit 4–5 pages of written discussion and
analysis. This means that you should avoid use of tables and charts as “space
fillers.”
Provide a brief introduction to/background of the problem.
Your written (in Word) analysis should discuss the logic and
rationale used to develop the LR equation and chart.
Provide complete, meaningful, and accurate recommendation(s)
concerning how the New Star Grocery Company might use the LR equation to
forecast future sales. (For example, how reliable is the LR equation in
predicting future sales?) What other recommendations do you have for the
client?
Write clearly, simply, and logically. Use double-spaced,
black Verdana or Times Roman font in 12 pt. type size.
Have an introduction at the beginning to introduce the
topics and use keywords as headings to organize the report.
Avoid redundancy and general statements such as “All
organizations exist to make a profit.” Make every sentence count.
Paraphrase the facts using your own words and ideas,
employing quotes sparingly. Quotes, if absolutely necessary, should rarely
exceed five words.
Upload both your written report and Excel file to the case 2
Dropbox.
Here are some guidelines on how to build critical thinking
skills.
Emerald Group Publishing. (n.d.). Developing Critical
Thinking. Retrieved from
http://www.emeraldinsight.com/learning/study_skills/skills/critical_thinking.htm
Module 2 – SLP
LINEAR REGRESSION AND SIMPLE EXPONENTIAL SMOOTHING (SES)
FORECASTING
Scenario: You are a consultant for the Diligent Consulting
Group (DCG). You have completed the first assignment, developing and testing a
forecasting method that uses Linear Regression (LR) techniques (Module 2 Case).
However, the consulting manager at DCG wants to try a different forecasting
method as well. Now you decide to try Single Exponential Smoothing (SES) to
forecast sales.
Using this Excel template: Data chart for BUS520 SLP 2, do
the following:
Calculate the MAPE for Year 2 Linear Regression forecast
(use the first spreadsheet tab labeled “Year 2 Forecast – MAPE”).
Calculate forecasted sales for Year 2 using SES (use the
second spreadsheet tab labeled “SES – MAPE”). Use 0.15 and 0.90 alphas.
Compare the MAPE calculated for the LR forecast (#1 above)
with the MAPEs calculated using SES.
Then write a report to your boss in which you discuss the
results obtained above. Using calculated MAPE values, make a recommendation
concerning which method appears to be more accurate for the Year 2 data: SES or
Linear Regression.
SLP Assignment Expectations
Analysis
Conduct accurate and complete SES analysis in Excel. You may
also check the following link for your reference:
https://support.office.com/en-US/article/data-analysis-7e71735c-c471-47e1-84ef-a8c23dc3098b
Written Report
Length requirements: 2 – 3 pages minimum (not including
Cover and Reference pages). NOTE: You must submit 2 – 3 pages of written
discussion and analysis. This means that you should avoid use of tables and
charts as “space fillers.”
Provide a brief introduction to/background of the problem.
Complete a written analysis that supports your Excel
analysis, discussing the assumptions, rationale, and logic used to complete
your SES forecast.
Give complete, meaningful, and accurate recommendation(s)
relating to whether LR or SES is more accurate in predicting sales.
Write clearly, simply, and logically. Use double-spaced,
black Verdana or Times Roman font in 12 pt. type size.
Have an introduction at the beginning to introduce the
topics and use keywords as headings to organize the report.
Avoid redundancy and general statements such as “All
organizations exist to make a profit.” Make every sentence count.
Paraphrase the facts using your own words and ideas,
employing quotes sparingly. Quotes, if absolutely necessary, should rarely
exceed five words.
Upload both your written report and Excel file to the SLP 2
Dropbox .
