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Forecasting Indices

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Forecasting with Indices
Christopher L Kearney
University of Phoenix
QRB/501 Quantitative Reasoning for Business
Maryam Boluri
May 2, 2011

Forecasting with Indices This writer will begin by defining forecast and index while detailing the importance of both as they relate to the makeup of any company. This type of data can be financial or non-financial depending on what the company offers. Forecasting is a method used by companies to predict current and future trends. Many companies have realized this to be the backbone of the company because it predicts whether or not a company will break even and if a company does not break even decided whether the company will be up and running the following year. An index is a point of reference concerning numbers with common points. Indices are used to observe historical and short-term comparisons with percentages change commonly used. This week’s lesson entailed obtaining the Summer Historical Inventory Data from the materials area in the week two forum and converting the information into an index. The time series information is to be used to forecast the inventory needed for the upcoming year. To give a company a better view of making decision a month-to-month forecast is best because more information can be obtained over a shorter period. The Summer Historical Data obtained from University of Phoenix Material was converted into an index using Microsoft excel software. The data showed typical demand for summer highs using demands in units, and the forecast was obtained by adding the first four years by months and dividing them by the four years to arrive at the forecast for the following year.
Forecasting is vitally important to any organizations growth for without it a company has no knowledge of the trends of sales. With proper forecasting a company knows when sales will increase or decrease...

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