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Alternative Fuel Company Case - Research Paper Example

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One of the best methods that are used in the prediction of the demand for most of the goods and services in this industry is the moving average method. The moving average model is used since it encompasses the use of numerous historical values that depict the demand for the…
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Alternative Fuel Company Case

Download file to see previous pages... This predictive model is deemed to encompass both the recent and the earlier demand for the goods. The moving average model is the most obvious model here since the data given is that which is deemed to produce units demanded for the previous years. Since the predictive model uses the historical data for its analysis, it forms the best model for this type of analysis (Sharma, 2009).
The reasoning behind this calculation is that the company sales each year represent the amount of units that the consumer will need each year. this is accentuated by the fact that the demand for these goods are deemed to be having positive correlation with the company’s units that they are suppose to produce (Crum, & Palmatier, 2003). Given this sense of reasoning, it is evident that the previous trend in the sales could be used in making sure that the company predicts its demand in the most favorable way.
The sales department expects the growth in Year four to more closely resemble the average growth experienced in the last two years. Predict the number of units expected in Year Four. Discuss whether you would recommend this quantity as the manufacturing plan or the quantity found using the simple three year moving average in step two and why.
From the two predictions of the two prospects of sales in units, the second prediction looks more accurate than the first one. This is because the second method of calculation inculcates the inter year growth of these sales in units. It is also a fact that the company is deemed to produce more using the second prediction model since this require the availability of higher amount of units than the company that would cater for any shortages that might be brought in (Artis, 2012).
In Year Three, one fourth of the production was sold in China. The marketing department has just learned of a new tax that will be imposed on all luxury imports into China beginning in Year Four. It is expected that this will ...Download file to see next pagesRead More
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