BUSINESS DECISION MAKING

PRESENTATION ABOUT COSMETIC MANUFACTURERS INC. (CMI)

Prepared by: Nguyen Thanh Ha Moon

TABLE OF CONTENTS
1. Introduction 2. Methods 3. Finding 4. Conclusion & Recommendation

1. INTRODUCTION

History Sale
Quarterly sales, in 1,000s Quarter 2006 1 2 3 4 500 350 250 400 2007 450 350 200 300 2008 350 200 150 400 2009 550 350 250 550 2010 550 400 350 600 2011 750 500 400 650

This report shows about the estimated sales in 2012 of CMI which be calculated by three methods: least squares method, additive model method and multiplicative/promotional model method, based on the sale data of the last for years.

2. METHODS
I used three methods for applying in forecasting the daily sales for 2012 of CMI: Least square regression method Additive model method Multiplicative/Promotional model method

LEAST SQUARES METHOD

Forecast of actual sales
Quarter 1 $000 540.396

2
2012 3 4 Total

550.961
561.526 572.091 2224.974

Forecast of actual sales in 2012

LEAST SQUARES METHOD

Sales forecast
900 800 700 600 500 400 300 200 100 0

y = 11.686x + 266.89 R = 0.3283

Actual Sales

Series1 Linear (Series1)

10
Quarters

20

30

ADDITIVE MODEL
Trend line Final estimate of average daily variation 131.25 Forecast of actual sales ($000) 731.578

Year

Quarter

forecast

1 2 2012 3 4 Total

600.328 610.854 621.38 631.906

-48.75 -141.25 58.75

562.104 480.13 690.656

2464.468

Forecast of actual sales in 2012

ADDITIVE MODEL
Sales forecast
900 800 700 600 500 400 300 200 100 0

Actual Sales

y = 11.8x + 265.81 R = 0.3325

Series1 Linear (Series1)

10
Quarters

20

30

MULTIPLICATIVE MODEL
Year Quarter
Trend line forecast Final estimate Forecast of

of average
daily variation

actual sales
($000)

1 2 2012 3 4
Total

600.328 610.854 621.38 631.906

1.33870585 0.88404985 0.62670285

1.15054085

803.6626 540.0254 389.4206

727.0337 2460.142

Forecast of actual sales in 2012

MULTIPLICATIVE MODEL
Sales Forecast
900 800 700 600 500 400 300 200 100 0 y = 11.977x + 264.2 R = 0.3384

Actual sales

Series1 Linear (Series1)

10
Quarters

20

30

CONCLUSION

In the Least Square Method, we can evaluate the reliability of this method through correlation coefficient of determination (r) r=
n n x 2 xy x x 2 n y
2 y 2 ( y)

2343242762 23452500098002 0.38558 => r20.1487

231248502769800

RECOMMENDATION

The two other methods have results are more reliable. The sales in 2012 have increase and decrease, exactly more than results by Least Square Method, which has only increase in sales. Between additive method and multiplicative method, the result by multiplicative method is more exactly because it has changing seasonal variations, whereas Additive model only adds the number without caring about it. Summary, Multiplicative model will be more reliable, so CMI should use it as forecasting techniques.