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Case Study - Tech Tierra Forecasting for Growth 2014




Question;Tech;Tierra;Tech Tierra ? Forecasting for Future;Growth;An individual;case study report;Created;by Dr. Phillip S. Rokicki;For;use in Qnt.5040;All;rights reserved;Tech Tierra ? The Company and the Challenge;Millie Granger and;Jose Mendes, friends and fellow;graduates from Texas Tech in electrical engineering had a great idea as;students. They noticed in Texas, with;large numbers of Hispanic families, that often parents and grandparents of;tech-savvy teenagers and young adults, were often left out of the technology;decision-making process. When they;studied at the Lubbock school they often wondered if they could create a;company that would bridge the gap of not concentrating on the older Hispanics;who most often funded the purchases of their younger children and;grandchildren. ThusTech Tierra was born.;The Company;Founded in mid-2004, the company began;with a single store in Lubbock, with growth of a store every year concentrating;on these older, but more financial secure Hispanic families. Now the company has eight stores in Lubbock, Austin;San Antonio, Houston, and is considering expanding into the Dallas area.;The current store chain has done well over the years as can;be seen by their monthly sales figures.;Jose is the Executive Vice President of Operations and Millie is the;CEO/President of the company mainly concentrating on expansion, franchising, finance;and corporation relations. They have;been a successful team over these past years.;The Challenge;Jose has as part of his duties the responsibility for;forecasting growth. He has a remarkable;record of predicting the monthly and annual growth of the company. He has managed to forecast the operating;income and expenditures within 7 percent each and every year. Thus, Millie has grown to depend on Jose?s;annual forecasts.;Jose has informed Millie that he has been offered a;corporate presidency of a larger chain of electronics stores in California and;will be leaving immediately. While the;California stores sell similar merchandise asTech Tierra, they do not operate outside of the state, so they are;not in direct competition with the Texas stores, and in;violation of Jose?s non-compete agreement.;Jose has not yet completed;his forecast for the remainder of 2013 and for the 8 months of 2014 (they do a 12 month forecast each August for;the next 12 months). But he has;given Millie a brief run down as to what he does to create the forecast, but;she feels unsure if she knows what to do.;Millie has hired you, a;locally known economic forecaster, to provide her with a 12 month forecast forTech Tierra. For this forcast you will be paid $50,000 now;and if your forecast proves to be accurate in 12 months (within10 percent of the actual) you will paid;an additional $50,000 bonus.You will be;allowed to adjust the forecast once, during the 6th month, to;reflect any changes in the economy that may occur. So it is to your own benefit to create an;accurate forecast.;Your Task and the Rules;You are to create a12 month forecast, fromSeptember 2013 through August 2014 forTech Tierra that uses the following;forecasting techniques;Theone variable summary in StatTools.Theruns test to determine if the data is;random or not.The annualbox and whisker plot.Themoving average with aspan of 3.Thesimple exponential smoothing forecast.TheHoltz linear method for trends.TheWintersmethod for trends and;seasonality.;To decide which of these has;the best forecast probability you will concentrate on the following results as;provided by the software;The mean absolute;error (MAE)The root mean;square error (RMSE)The mean absolute;percentage of error (MAPE)The average error;(see slides 81 to 83 from week 7)The cumulative;error (see slides 81 to 83 from week 7);Important things you need to know;The company?sfiscal year goes fromFebruary;of one year toJanuary;of the next year.All sales are in thousands of dollars, thus11,345 = 11,345,000 in sales for that month.;Your Tasks;Carry out the;various statistical tests as indicated above.Analyze the;resulting data, and determine which of the forecasting techniques provides the;best forecast, and why.Report on each of;these forecasting techniques in your report, explaining what you did, what you;found out, and how you decided which forecast is the best.Forecast the next;twelve months of sales forTech Tierra.Submit your;individual report on time.;Write a management report;(using the required format) suggesting and justifying an appropriate decision;regarding the sales forecast. In your;report, analyze the patterns of the monthly time series, discuss the properties;of each forecasting model and their relevance to predicting the series,select;the best forecasting model for the series, make your recommendations;supported by arguments which are further supported by references to model;results and tables or figures in your report.;Independent outside research is encouraged to provide relevant;background information and/ or to provide more support for your arguments.;Please make sure that you use;the Assignment Cover Sheet as the first page of you report and the Grading;Rubric as the second and third pages of your report (available on BB). Please;embed your Excel spreadsheet showing the appropriate calculations and charts;into the Appendix section of your report.;How to embed a file into a Word document is explained in Format of a;Management Report. (Available on BB);Submit this report into the;Assignment Dropbox.


Paper#62125 | Written in 18-Jul-2015

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