Q&A

## Be Prepared For The Toughest Questions

### Practice Problems

The Prescott Bakery Company Case Study

part 1

Step 1: Define the Problem to be solved

(How does Bill go about trying to figure out what forecasting problems he has in his business?  This is a general discussion of how any business figures out what problems it may be happening related to forecasting.)

Step 2: Gather Statistical and Other Data

(How does Bill get the data that he needs for any problem, and how can he be sure that the data is correct and accurate?  What other types of data could impact a forecast - think production issues and cost of raw materials, etc.  Do NOT just state that the information is already provided.  Concentrate on explaining how to obtain accurate data that can be used in forecasting.)

Step 3: Look for Patterns in the Data or Outliers

(What should Bill look at in the data?  What types of graphs should he develop, and what statistics should he review before he attempts to forecast using this data, such as the mean, standard deviation, Kurtosis, etc.?)

Step 4: Select a Forecasting Model to Use[1]

(What is a forecast?  How long does a forecasting technique work?  What are the different types of forecasts that he could use for his company?  How does he know if the forecasting technique is any good for his company?)

Step 5: Evaluate the Results of the Forecasting Model and Apply the Results

(Once he has a forecast how does he ensure that the forecast remains accurate, and then how does he apply the results of the forecast?)

[1] Here you may discuss in general what are common forecasting techniques.

PART 2

The Raw Data for Parts 2 and 3 of the Case Study

 Prescott Bakery Pie Production 2016 January 4,925 \$6.00 February 5,639 \$7.31 March 5,842 \$6.10 April 6,236 \$7.35 May 5,849 \$6.60 June 6,201 \$6.88 July 5,809 \$7.15 August 5,082 \$7.33 September 6,011 \$6.09 October 5,470 \$5.97 November 5,892 \$6.57 December 5,364 \$6.93 January

Using the templates provided, complete the following table.  NOTE: The exponential smoothing template must be run four (4) times with a different alpha to complete this table.  Remember that the company estimates that it produces about 5,600 pies a month (you need this figure for each of these forecasting techniques for the initial estimate average and for the estimator in the causal forecasting technique).

1.      How is the MAD forecasting statistic calculated and what does the results mean?

2.      How is the MSE forecasting statistic calculated and what does the results mean?

3. how has last Value Forecasting Technique calculated and what does the results mean?

4.      How is the Averaging Forecasting Technique calculated and what does the results mean?

5.      How is the Moving Average Forecasting Technique (3MA) calculated, what does the term “3MA” mean, and what does the results mean?

6.

Hint

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