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Chapter I
Introduction……………………………………………………………2
Objectives……………………………………………………………..3
Chapter II
Methodology…………………………………………………………...4
Chapter III
Chapter IV
Analysis of Data……………………………………………………….7
SWOT Analysis……………………………………………………….15
Chapter V
Summary………………………………………………………………17
Conclusions…………………………………………………………….17
Recommendations……………………………………………………..17
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Chapter I
Introduction
In business of any field, anticipating the needs of your clients and serving these
needs, definitely spell success. A good management team uses past and present data,
analyzes the trend of the current situation, and still relies on “gut feeling” on what is
likely to happen in the future, Decisions are made every day, and coming up with the best
strategic plan of action in the future is an essential tool. Consequently, managers try to
minimize the “uncertainty” of the future in forecasting. A forecast simply means
prediction of what is likely to happen in the future. Converting the prediction into
numbers and concrete data is the main purpose of forecasting. A forecast is an estimate of
the future level of some variable. That variable is most often demand but could also be
supply or price. Most companies forecast in order to help the firm in strategic planning
activities such as inventory purchasing, capacity planning, labor planning, etc. It is the
technique of estimating the relevant future events and problems on the basis of past &
present data.
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Objectives:
To improve organizational performance: more revenue, more profit, and increase
customer satisfaction.
To forecast the succeeding year’s sales using the trend line formula
To identify what decisions will be made using the information from the forecast
To identify uncertainties matter for these decisions
To provide possible strategic plans in the future
To eliminate the possible threats for the business
To increase sales and lessen the problems to be encountered
This case study is limited only on forecasting using trend line formula only that will help
a lot of businesses or people who wants to predict their future performance and to know if they
will earn profit or not. The study will discuss about a company that wants to know if they will
earning profit for the next year. The researchers will be using trend line formula to calculate of
forecast the future performance of this company.
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Chapter II
Methodology
̅
Y = a + btx
Where:
∑ 𝑡𝑦−𝑛𝑡̅𝑦̅
𝑎 = 𝑌̅ - 𝑏𝑡̅ 𝑏= ̅̅̅̅
∑(𝑡)2 −𝑛(𝑡) 2
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Chapter III
Description of the Firm
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Chapter IV
Analysis of Data
The Problem provided by the researchers is about AMRL Corporation who wants to
forecast their future sales by the next year. Also want to know what are the steps, strategies, or
procedure to be done or need to do to maintain or exceeds the profit they have earned for this
year.
PROBLEM:
Amiela, the Sales Director of AMRL Corporation, wants to forecast the sales of Sweets
and Loves Business on a monthly basis. She wants to forecast the monthly sales for next year.
He thinks that there is a linear trend of the monthly sales over time.
This year, the sales for the month of January is 70,000, February is 75,000 , March is
79,000 , April is 80,000 , May is 75,000 , June is 87,000 , July is 90,000 , August is 85,000 ,
September is 95,000 , October is 100,000 , November is 105,000 and December is 108,000. The
figures are summarized in Table 1.1
Should Amiela use the trend projection technique? What is the forecast on the monthly
sales next year?
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Table 1.1 Monthly Sales
Month Sales
(This Year) (000)
January 10
February 11
March 13
April 15
May 13
June 16
July 20
August 21
September 18
October 22
November 30
December 35
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Step 1: Plot the Sales over time to determine if there is an apparent linear trend
There seems to be a positive linear trend between the monthly sales and the time period.
AMRL Corporation
40
35
30
Sales (000)
25
20
15
10
5
0
Month
𝑌̅ = a + bt𝑥
Where:
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t𝑥 = independent variable
∑ 𝑡𝑦−𝑛𝑡̅𝑦̅
𝑎 = 𝑌̅ - 𝑏𝑡̅ 𝑏= ̅̅̅̅
∑(𝑡)2 −𝑛(𝑡) 2
Process:
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2. Compute the square of each time period (𝑡) :
12 = 1
22 = 4
32 = 9
42 = 16
52 = 25
62 = 36
72 = 49
82 = 64
92 = 81
102 = 100
112 = 121
122 = 144
3. Compute the product of the time period (𝑡) and sales (Y) :
1 (10) = 10
2 (11) = 22
3 (13) = 39
4 (15) = 60
5 (13) = 65
6 (16) = 96
7 (20) = 140
8 (21) = 168
9 (18) = 162
10 (22) = 220
11 (30) = 330
12 (35) = 420
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4. Compute the sum of each row/ set:
Row 2 = 1+2+3+4+5+6+7+8+9+10+11+12 = 78
Row 3 = 10+11+13+15+13+16+20+21+18+22+30+35 = 224
Row 4 = 1+4+9+16+25+36+49+64+81+100+121+144 = 650
Row 5 = 10+22+39+60+65+96+140+168+162+220+330+420 = 1732
5. Compute the average period (𝑡) and average sales (Y) :
𝑡̅ = ∑ 𝑡/n
= 78/ 12
= 6.50
Y= ∑ Y/n
= 1049/12
= 20.50
1732−12(6.50)(20.50)
=
650−12(6.50)2
= 0.93
7. Compute the Y- intercept (a)
𝑎 = 𝑌̅ - 𝑏𝑡̅
= 20.50 − 0.93(6.50)
= 14.46
8. The trend formula of the sales forecast (𝑌) is :
̅ = a + bt𝑥
𝑌
= 14.46 + 0.93 (t𝑥 )
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Table 1.2 Trend Line Formula
January 1 10 1 10
February 2 11 4 22
March 3 13 9 39
April 4 15 16 60
May 5 13 25 65
June 6 16 36 96
July 7 20 49 140
August 8 21 64 168
September 9 18 81 162
October 10 22 100 220
November 11 30 121 330
December 12 35 144 420
Total 87 224 650 1732
Average Values Coefficients
Periods (n) 12 12 a 14.46
Average 6.5 87.17 b 0.93
Step 3: Determine the monthly sales forecast (𝑌) for the next year.
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June = 14.46 + 0.93(18) = 31.20
January 13 26.55
February 14 27.48
March 15 28.41
April 16 29.34
May 17 30.27
June 18 31.20
July 19 32.13
August 20 33.06
September 21 33.99
October 22 34.92
November 23 35.85
December 24 36.78
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SWOT ANALYSIS:
Strength
Every Company has its own strength that they enhance more for the good of their
company’s existence. In this company, due to large investments of the investors, also the
high customer demand to the products of AMRL Corporation, the sales were able to
achieve a high profit every month. In the first month, the sales starts from 10,000, as the
month passes, it continued to increase more and more until December. The Company
should maintain this range of profit in the following years or exceed more so that they
may continue and be profitable.
Weaknesses
All of the companies or businesses have weaknesses that they want to minimize or
eliminate if possible in their company to have or to maintain profit. In this company,
which is AMRL Corporation, the weaknesses they should do action is about the
consistency of their sales every month. Every company wants to incur profit and not
losses. Due to this, the company should think a way that may remain their sales in a high
profit.
Opportunities
On the side of AMRL Corporation, the company should grab the opportunity in
selling their products in different places because their products are different and very
unique from others. And because of that, the demand for their product is high. The
Company should not miss this opportunity to be known by everyone. They should start
selling from provinces and as it continues to grow, they may also sell their products
outside the country.
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Threats
Companies struggle on how to maintain their status in the future and this one is one of
the threats that every company are facing. For AMRL Corporation, they should think
about their future threats on how to maintain their uniqueness from others. We all know
that as the product becomes popular, many businesses will do the same product or imitate
the product to earn profit. And because of that, the company should be prepared if that
will happen. They should create strategies or formulate another twist to their previous
product so it will remain in demand to the consumers.
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Chapter V
Summary, Conclusions and Recommendations
Summary:
The AMRL Corporation has increasing trend sales during the course of twelve-month
period. The sales for the current year were given to the researchers. Using the trend line
regression analysis, the researchers were able to acquire forecasts sales for the entire succeeding
year. The researchers were also able to plot the increasing trend, showing improvement on
customer sales.
Conclusion:
Given the sales of the current year, the trend line analysis was used to forecast the
succeeding year’s sales. The researchers were able to formulate the trend line equation14.46 +
0.93 (t 𝑥 ). The forecasts viewed an expected increase in sales for the next year. This will result in
increase in investment for the next year, with a consecutive increase in customer product
demand.
Recommendations:
The researchers have fully reached the aims and objectives of the study, and created the
following recommendations for the future study:
1. The use of different methods of acquiring forecasts for the succeeding year, aside from
the trend line regression.
2. The use of other data such as customer demand, production count, and inventory storages
to forecast the sales of the next year.
3. The use of both Qualitative and Quantitative methods.
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