1.

FORECASTING

High-low method
Correlation equation: y = a + bx
b = (y2-y1)/(x2-x1)
a= y1 – b*x1

Example:
This table shows the information for advertising and sales established over the
past
06 months of Mango Co, a dried fruit manufacturing company.
Month Advertising expenditure Sales revenue

$’000 $’000
1 3 155
2 2.5 115
3 2.7 125
4 4 160
5 3.5 170
6 3.7 165
Using the high-low method which of the following is the correct equation for
linking
advertising and sales from the above data?
- At Level of activity: x1: 2.5; x2 =4  y1 = 115, y2 = 160
- b= (y2-y1)/(x2-x1) = (160-115)/(4-2.5) = 30
a = 115 – 30*2.5 = 40
 y = 40 + 30x
Forecast: if x (Advertising expenditure) = 5  y (Sales revenues) = 190

Linear regression: y= a + bx

Square of r = coefficient of determination

 y = 15.325 + 2.28x
Square of r = 1 = 100%
Hệ số xác định 100%  cho biêt 100% thay đổi của y được giải thích bởi x

Example 2
Square of r = 0.98 x 0.98 = 0.95 = 95%
 95% sự thay đổi của y được giải thích bởi x

Time series analysis

Trend – Moving Average
Index Numbers
Examples
Item Quantity Price per unit Quantity Price per unit
20X0 20X0 20X2 20X2
'000 units Roubles '000 units Roubles
P 60 3 80 4
Q 30 6 40 5
R 40 5 20 8
S 100 2 150 2
T 20 7 10 10
Item Qo Po Qn Pn PoQo PoQn PnQo PnQn
P 60 3 80 4
Q 30 6 40 5
R 40 5 20 8
S 100 2 150 2
T 20 7 10 10

900 950 1110 1080

Price index

- Laspeyre price index = 1110/900x100= 123.3

- Paasche price index = 1080/950x100 = 113.7

Quantity index

- Laspeyre quantity index = 950/900x100 = 105.56

- Paasche quantity index = 1080/1010 x 100= 106.93

Fisher index

Fisher price index = 118.4

Fisher quantity index =106.24