4.Crystal Ball Training. The first Forecast. The tropical shampoo sales.

Today we are going to learn a new tool called predictor, as you guess it will help us to make forecast, The tool is really handy and easy to use, however it requires knowledge of statistics to get the most of it. While you are running the predictor tool for first time, you will see too many options and different ways to compute the your forecast. Now, we are going to keep it simple.

Exercise. The tropical shampoo sales.

In this example, you are a sales manager for Tropical Cosmetics Co. The company’s latest product, shampoo with tropical ingredients, has been in the marketplace for almost a year now. The vice president of marketing wants you to forecast the rest of the year’s sales of shampoo and decide whether to recommend investing in advertising or enhancements for this product. You have the weekly sales numbers for the last nine months, and you will use Predictor to forecast weekly sales through the end of the year.

To start predictor simply click on a cell, and then on predictor.

This would be your first page, after the welcome in the case that it´s your first time using the tool, we don´t need to change anything here.

The second page is Data Attributes where we have to be sure that the data is in weeks. Then, the seasonality is really interesting in this tool because it´s able to understand that our data has information which are following the same patterns such as an increase for the toy industry during the Christmas season. However, we are not sure about this data, so we will let the tool "to guess" our data.

If we would have more variables the methods page would be different since it would be the multiregression method. Anyway, we are not going to change anything here either.

Finally, we will keep in mind that RMSE and Standard forecasting are selected here. 

Here is our forecast, the are some important points such as periods to forecast where we can "adjust " the number of periods that we want to get. Then, we can change the cofidence interval to get more accuarated results. 

Based on the results, you complete your memo to upper management.Current strategies seem to be working so you recommend funding another project instead.

Interoffice memo

Date: 31/12/2014

To: Marketing

From: Sales Manager

Re: Sales of new tropical Shampoo

Per your request, I have painstakingly analyzed the Tropical Shampoo sales data for the year to date. The analysis indicates that sales trend, with the current marketing strategy, is sufficient to drive the sales to the projected product goal of 100.000 units per week by the end of the year.

With this in mind, I´d like to recommend the re-direction of the marketing dollars to the new release our hair conditioner, SunOut!