Forecasting business needs Essay Example | Topics and Well Written Essays - 1000 words

Forecasting business needs - Essay Example Historically, at Blues Inc., changes in sales are closely reflected in changes in the advertising budget. Based on the $2.4 million figure, we forecast an advertising budget of $162 million. We have also forecast the overall market size based on its recent performance. Currently, the market size is approximately $39 billion. To eliminate the effects of temporary changes in market conditions, we used a two-year weighted moving average, with the most recent year has greater significance. This gives us an indication of the trend and helps to even out any spikes or sudden changes. You have also requested a production schedule, by quarter, for the next year. We have based the overall production level based on our 6 percent market share of a $39 billion industry. This is approximately 777 million units. Accounting for the industry growth rate, for Blue inc, this will mean 50 million units for the year. Because there has been a considerable fluctuation in sales during the fourth quarter of previous years, we used a centered moving average to arrive at our results to compensate for the seasonal changes. We utilized the past 6 years of data. This gave us sufficient information to arrive at an answer, without using data that is outdated and may skew the results. Arriving at the results of this forecast has required my team to consider past results to predict our future performance. When deciding which method to use, it was important to review the existing data to see which method would yield the best results.