Quantitative Methods for Business_ Ms.

Dang Thi Uyen Thao 1

Please read the following instructions carefully before working on the assignment

• PROCESS IS MORE IMPORTANT THAN RESULT

• There is a 10-extra-point-worth question in each chapter, so you may get 110 points at the
maximum
• Assignment is due on the following class next week, late submission will be deducted 10
points per day
• Handwriting is required
• Work in groups of two, and individuals may work alone if they wish to do so
• Let yourself struggle with problems for a while before looking up the answer using other
resources. What you turn in should reflect your own understanding of the assignment but
not the capability of copying from a solution manual. A copied answer is considered
plagiarism and is marked zero with no excuse.
• Please attach the information below on the top of the submitted answer paper. The scale
for Contribution is from 1 to 5, in which 1 describes minimum and 5 describes maximum
commitment.

__________________________________________________________________________

QUANTITATIVE METHODS FOR BUSINESS

Ms. Dang Thi Uyen Thao
INDIVIDUAL/PAIR ASSIGNMENT CHAPTER 5
dd/mm/yy

Full name & ID Contribution

Tasks and Questions

TIME SERIES FORECASTING .

Question 1

The following table gives the average monthly exchange rate between the US dollar and the
Australian dollar for 2018. It shows that 1 US dollar was equivalent to 1.256 Australian dollars in
January 2018.
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 2

a. Evaluate the components of time series of average monthly exchange rate

b. Smooth out the patterns that includes everything the model learned so far based on history
record of the exchange rate. The forecast in the first month was 1.235. You are free to
choose the suitable coefficient to conduct the model. Explain the decision on the coefficient
c. Would you apply the method in part (b) to forecast the monthly exchange rate for 2020?
Please suggest and conduct all possible techniques that may apply to predict monthly
foreign exchange rate in Year 3.
d. Compare the forecasting results of different techniques applied in part (c). Which ones
yield more accurate results?

Year 1 Year 2
Jan 1.256 1.542
Feb 1.356 1.567
Mar 1.305 1.531
Apr 1.320 1.601
May 1.363 1.702
Jun 1.302 1.715
Jul 1.398 1.657
Aug 1.534 1.795
Sep 1.456 1.765
Oct 1.501 1.745
Nov 1.491 1.799
Dec 1.601 1.802

Question 2

Monthly sales for each of the past 3 years of Denmark Co. are provided below. A forecast of sales
for the next year is needed to help in the determination of the value of the restaurant.
a. Plot the time series of sales.
b. You may need to smooth out the patterns by a 12-month moving average to discuss any
apparent components of the time series. Plot a 12-month MA on the same graph in part (a)
c. Develop a trend line to forecast monthly sales in Year 4.
d. Is the slope of the trend line in part (c) consistent with the 12-month MA in part (b)?
Discuss a possible explanation.
e. Apply Seasonal variations (Model 6) technique to calculate the seasonal indexes and
forecast the monthly sales in Year 4

Year 1 Year 2 Year 3

Jan 438 444 450
Feb 420 425 438
Mar 414 423 434
Apr 318 331 338
May 280 295 302
Jun 240 245 254
Jul 220 240 250
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 3

Aug 216 223 231

Sep 198 210 224
Oct 225 233 243
Nov 270 278 289
Dec 315 322 335

Question 3

Data collected on the yearly demand for coffee bags at Cape Town Co. are shown in the following
table below
a. Plot the time series of the demand.
b. Develop a monthly forecast of sales using naïve method
c. Develop a 4-quarter MA to forecast month sales of Cape Town Co.
d. Develop a trend line and then forecast monthly sales Cape Town Co.
e. Apply Seasonal variations (Model 6) technique to calculate the seasonal indexes and
forecast the monthly sales in Year 5 of Cape Town Co.
f. Compare and discuss about the results in part (b), (c), (d) and (e)

Quarter Year 1 Year 2 Year 3 Year 4

1 218 225 234 250
2 247 254 265 283
3 243 255 264 289
4 292 299 327 356

Question 4 (10p bonus)

Discuss the rationale of the length of a Moving Average period in each scenario.
Hint
The logical basis of using 12-month MA in Question 2?
The logical basis of using 4-quarter MA in Question 3?

_____ THE END _____