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Week 2 Homework Assignment

# Week 2 Homework Assignment - 1 We average the sales from...

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1. We average the sales from all previous years to predict the sales in 2006. Original Series Year Sales 1999 \$300,000 2000 225,000 2001 325,000 2002 650,000 2003 540,000 2004 675,000 2005 825,000 2006 505,714 2. To account for the non-repeating \$200,000 sale in 2002, we subtract \$200,000 from the sales in 2002. Revised Series Year Sales 1999 \$300,000 2000 \$225,000 2001 \$325,000 2002 \$450,000 2003 \$540,000 2004 \$675,000 2005 \$825,000 3. We average the sales from all previous years (including the revised number for 2002) to predict the sales in 2006. Revised Series Year Sales 1999 \$300,000 2000 \$225,000 2001 \$325,000 2002 \$450,000 2003 \$540,000 2004 \$675,000 2005 \$825,000 2006 477,143 4. The projection from question 3 is more representative of the company's sales because it excludes a non-repeating sale. The sales data is more representative of a real trend over time when one-off events are excluded. 5. Here we used exponential smoothing with a damping value of 0.25. Year Sales Exponential Smoothing Forecast 1999 300,000.00 #N/A 2000 225,000.00 300,000.00 2001 325,000.00 243,750.00 2002 450,000.00 304,687.50 2003 540,000.00 413,671.88 2004 675,000.00 508,417.97 2005 825,000.00 633,354.49 2006  777,088.62  6. We use the GROWTH function below. Year Sales 1999 \$300,000 2000 \$225,000 2001 \$325,000 2002 \$450,000 2003 \$540,000 2004 \$675,000 2005 \$825,000 2006 988,651 7. Running Excel's regression function on the years 1999 to 2005 and the corresponding sales numbers, we get the output below. To find the regression estimate for 2006, we use the coefficients from the regression output and write Sales Estimate = (X_Variable * 2006) + Intercept.
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