Forecasting Sales
Advertising is often touted as key to success. In seeking to determine just how influential advertising is, the management of a recently established retail chain collected data on sales revenue and advertising expenditures from its stores over the last 15 weeks, with the results shown in the following table:
|
Advertising expenditure ($000s)
|
Sales ($000)
|
|
3.0
|
50
|
|
5.0
|
250
|
|
7.0
|
700
|
|
6.0
|
450
|
|
6.5
|
600
|
|
8.0
|
1000
|
|
3.5
|
75
|
|
4.0
|
150
|
|
4.5
|
200
|
|
6.5
|
550
|
|
7.0
|
750
|
|
7.5
|
800
|
|
7.5
|
900
|
|
8.5
|
1100
|
|
7.0
|
600
|
The management is contemplating to increase sales and wants to investigate the effect of increasing advertising expenditure. The marketing manager believes that if advertising expenditure is increased to $12,000, sales of approximately $1,400,000 can be achieved. You have successfully completed your Bachelor's degree and have joined the firm as analyst. Your first assignment is to write a report to the CEO of the company. Your report should consist of:
(a) an executive summary
(b) an introduction
(c) a brief literature review of factors influencing sales
(d) an analysis of the above data using data analysis techniques learned in your QM course to investigate the relationship between advertising expenditure and sales. You should also investigate the validity of the marketing manager's claim.
(e) an outline of the strengths and weaknesses of the techniques you have used in your analysis.
(f) the limitations of your analysis and a brief explanation of how your forecast can be made more accurate.
(g) a conclusion
(h) a list of references.
Adapted from Selvanathan&Selvanathan (2014)
Assignment guidelines
(i) The assignment is due on 20 May 2015.
(ii) The word limit is 1500 words excluding charts and appendices.
(iii) Each group must comprise of 3 members or less.
(iv) Each group should make an oral presentation of max 10 mins on 27 May 2015.
(v) Collusion will lead to immediate failure and plagiarism will be heavily penalized.