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- Date Submitted: 02/19/2011 6:26 AM
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Running head: FORECASTING WITH INDICES

Forecasting with Indices

Adam Lambert

University of Phoenix

Instructor: Jeff Hines

Course: QRB/531

September 25, 2010

Forecasting with Indices

The process of forecasting is performed by using data from past data to help predict future trends. Data gathered from previous years can help predict future inventory needs by using statistical formulas and linear regression analysis. This assignment will use the data provided from the University of Phoenix website which represents Winter Historical Inventory Data (University of Phoenix, 2010).

The data will be indexed by using the given data and each month is plotted using a linear trend line. I have included a few of the months to show how the indices were created. From these plots, trend lines were calculated from the Excel software program which created a forecast for each month. Indices were created for each month by dividing the current month by the index (first month) in each year. An index number smaller than one, indicates that there will be a decrease from the previous year to the year in comparison. When the index number is greater than one then this will show and increase from the indexed year to the year in comparison. The following chart shows the resulting index for each month.

Month Index Y2 Index Y3 Index Y4

1 .721014 .582971 1.128623

2 1.117698 .67306 1.159547

3 3.090909 1.624675 2.038961

4 1.554152 1.851986 1.31769

5 1.836449 1.485514 .785047

6 .602339 1.818713 1.105263

7 2.505556 3.322222 1.972222

8 2.35 1.552525 2.588384

9 1.407643 3.044586 2.191083

10 .771455 1.378545 1.268657

11 .552885 .723558 .81851

12 .573388 .757202 .838134

After the indices are created they are plotted onto a scatter plot and the trend line function in Excel is used to determine the best...

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