Forecast: a Naive trend model and ii) Holt?s method.


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Produce forecasts of DJS monthly sales using two models: i) a Naive trend model and ii) Holt?s method. As explained above, you must first forecast monthly Industry Turnover using each model and then multiply these two forecasts by DJS market share forecast. Compare each model?s forecasts using the holdout period from January 2010 to August 2011. Explain which forecasting model you prefer and then use your preferred model to forecast DJS monthly sales for each of the six months from September 2011 to February 2012. Document Preview: 1 25705 Financial Modelling and Forecasting Spring Semester 2011 Case Study Contributes 30% to your total grade This case study gives you the opportunity to demonstrate your understanding of two fundamental parts of this subject. To demonstrate the practical nature and realworld applicability of your learning, the case study involves an analysis of David Jones Limited (DJS), a company listed on the Australian Securities Exchange (ASX). Part A requires you to demonstrate your understanding of seasonal adjustment and forecasting. Part B requires you to demonstrate your knowledge of regression analysis and financial modelling. Although the forecasting and modelling is completed in EXCEL, you must prepare a report that explains the analysis you have conducted and presents your results. All thirty available marks are based on the report. No marks are awarded for your spreadsheet. PART A: Seasonal adjustment and forecasting (10 marks) You are required to produce monthly sales forecasts for DJS to help management with their planning, inventory control and resource allocation decisions. Unfortunately, a time-series of DJS historical monthly sales figures is not publicly available. Therefore, you decide to instead analyse retail turnover figures for the industry and use a “market share” methodology to estimate DJS monthly sales. From the Australian Bureau of Statistics (ABS) you obtain data for the publication „8501.0 -Retail Trade, Australia; TABLE 1. Retail Turnover, By Industry Group? ensuring the data ends in August 2011. Do not use the figures for September or October 2011 in your analysis. Use the appropriate data to build a model [see Task 1. below] to forecast monthly Industry Turnover. Next, to convert these monthly Industry Turnover forecasts into monthly sales forecasts for DJS you multiply your Industry Turnover forecasts by DJS market share percentage. To estimate DJS market share you total the twelve monthly Industry Turnover figures from August of each year to… Attachments: 25705-Spring-….pdf

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