Jia Wu goes West - Teaching Note

Description

The objective of this note is to illustrate forecasting with monthly sales data. It is based on historical data of household goods sales in United Kingdom, from January 1997 to December 2011. The student is challenged to develop a model for these data and to calculate a forecast for 2012 sales, based on this model. There is a companion IESE focus case, - ADFC-003 -"The Jia Wu Expansion", that covers the prior expansion of Jia Wu to Australia. The purpose and the content of the two documents are the same, although the methods used in this note are more complex. While, in the case, the forecasts were based on a linear trend plus a set of multiplicative seasonals, here we discuss two alternatives: (a) a quadratic trend plus a set of additive seasonals, and (b) an additive Holt-Winters model. This note can be used in many ways: (a) in one session, skipping one of the two models discussed in this note; (b) in two sessions, including both models; or (c) combined with the companion case, using one document for the quadratic trend and the other for the Holt-Winters method. Basic knowledge of Excel or analogous spreadsheet application is required. The calculations are assumed to be performed with standard spreadsheet functions.

Related Documents

• Jia Wu Goes West

Keywords

Forecasting Holt-Winters out-of-sample Sales seasonality time series trend