National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows: Month

Sales (000 units)

Feb.

19

Mar.

18

Apr.

15

May

20

Jun.

18

Jul.

22

Aug.

20

a. Plot the monthly data on a sheet of graph paper.

b. Forecast September sales volume using each of the following:

(1) The naive approach.

(2) A five month moving average.

(3) A weighted average using .60 for August, .30 for July, and .10 for June.

(4) Exponential smoothing with a smoothing constant equal to .20, assuming a a March forecast of 19(000).

(5) A linear trend equation.

c. Which method seems least appropriate? Why? ( Hint: Refer to your plot from part a.)

d. What does use of the term sales rather than demand presume?