Case Study

7i technology is a medium-sized consulting frm in San Francisco that specializes

in developing various forecast of product demand, sales, consumption, or other
information for its clients. To a lesser degree, it has also developed ongoing
models for internal use by client companies. When contacted by a potential
client, 7i technology usually establishes a basic agreement ith the frm!s top
management that sets out the general goals of the end product, primary contact
personnel in both frms, and an outline of the pro"ect!s overall #including any
necessary time constraints for intermediate and fnal completion and rough price
estimate for the contract$. Folloing this step, a team of 7i personnel is
assembled to determine the most appropriate forecasting techni%ue and to
develop a more detailed or& program to be used as the basis for fnal contract
negotiations. This team hich vary in size according to the scope of the pro"ect
and the client!s needs, ill perform the tas&s established in the or& program in
con"unction ith any personnel from the client frm ho ould be included in the
team.
'ecently, 7i has been contacted by a rapidly groing multinational frm that
manufactures, sells android based tablets for enterprise and retail use.
(oneycomb has seen aggressive in global and regional mar&et and is in the
process to defne ne strategy to increase its present mar&et share. )ut the
problem hich the company is presently is facing is in terms of demand so that
they can o*er competitive price to increase their mar&et share.
+s a )usiness +nalyst of 7i you must decide beteen di*erent forecasting
techni%ues for ee&ly sales of tablets, a linear trend e%uation and the naive
approach. The linear trend e%uation is
-i. /0102, and it as developed using data from periods / through /3. )ased on
the data from periods // through 03, calculate the 456 #4ean 5ercentage 6rror$
and 4+56 #4ean +bsolute 5ercentage 6rror$.
)ase on the values of 456 and 4+56 comment on hich of the to methods has
the greater overall accuracy. 7ompare the to methods in terms of the forecast
bias.
T 8nits Sold #333 thousand$
// 09
/0 0:
/; ;<
/< <3
/9 <<
/= ;>
/7 <:
/: 93
/> <7
03 9<