Operations and Supply Chain Management The Core

78 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
SOLVED PROBLEM 3
Excel:
Forecasting
Here are the quarterly data for the past two years. From these data, prepare a forecast for the
upcoming year using a linear regression line calculated with Excel and seasonal indexes.
YEAR 1 QUARTER ACTUAL YEAR 2 QUARTER ACTUAL
1 300 1 416
2 540 2 760
3 885 3 1,191
4 580 4 760
Solution
(1)
Quarter
t
1
2
3
4
5
6
7
8
9
10
11
12
(2) (3) (4) (5) (6)
Actual
Amount
y
300
540
885
580
416
760
1,191
760
Forecast
from
Regression
431.7
502.3
573.0
643.7
714.3
785.0
855.7
926.3
997.0
1,067.7
1,138.3
1,209.0
Seasonal
Index
0.69
1.07
1.54
0.90
0.58
0.97
1.39
0.82
Calculated
Seasonal
Index
0.64
1.02
1.47
0.86
Forecast
Including
Trend and
Seasonal
Y
636.8
1,090.7
1,671.3
1,040.7
Each quarter has been numbered consecutively in column (1). Quarters 1, 2, 3, and 4 correspond to
year 1, and quarters 5, 6, 7, and 8 are the first through fourth quarter of year 2. The actual demand
data are in column (2). The regression line is calculated using the Excel INTERCEPT and SLOPE
functions. The regression line giving the forecast including trend is
For example, for quarter 9
​FIT​ t ​ = 361 + 70.67 × t​
​997.0 = 362 + 70.67 × 9​
The seasonal indexes are calculated in column (3) as the ratio of actual/forecast. For example, for
quarter 2
​1.07 = ​ 540 _____
502.3 ​