Abc Floral Shop

A Geranium Hanging Basket normally prices at $39.99 plus shipping of $18. The price includes the Geraniums, the basket, the designing of the basket and geraniums. The shipping cost will cover processing fees, taxes, shipping, and handling.

The moving average for a 3 and 5-year period would look like this:

Demand 3MA 5MA

200

134

157 163.7

165 152.0

177 166.3 166.6

125 155.7 151.6

146 149.3 154.0

150 140.3 152.6

182 159.3 156.0

197 176.3 160.0

136 171.7 162.2

163 165.3 165.6

157 152.0 167.0

169 163.0 164.4

Note: Please refer to Chart 1 and 2 in Appendix I and II

After forecasting using the original data in excel and forming a graph, it seems that a 5-year moving average has less of a vertical deviation. In the 3 year period there appears to be a couple of drops but also big increase around the 10th day.

Note: Please refer to Graph in Appendix III

After studying the graph and the charts, it appears that the best forecast for ABC Floral Shop is in a 3-year moving average. During this period, it appears that the MAD (Mean Absolute Deviation) of 1.44 is lower in a 3-year period. The MSE (Mean Squared Error) is lower in a 3-year period as well with a 32.87. The MAPE (Mean Absolute Percent Error) is lower with an -0.31 in a 3-year period also.

References

Google Search Engine. Average Cost of Geraniums. Retrieved from http://www.shopping.com/flowers-and-plants/flower-type-geranium/products?sb=1

Heizer and Render, (2012) Operations management flexible version 10th edition, Pearson education

APPENDIX I

APPENDIX II

APPENDIX III