Forecasting Case Study – Best Homes
Read the case study “Best Homes, Inc.: Forecasting (see below) and Answer the Questions.
- What forecasting methods should the company consider? Please justify:
- Use the classical decomposition method to forecast average demand for 2016 by month. What is your forecast of monthly average demand for 2016?
- Best Homes is also collecting sales projections from each of its regions for 2016. What role should these additional sales projections play, along with the forecast from question 2, in determining the final national forecast?
Synopsis and Purpose
The purpose of this case is to expose students to the issues involved in forecasting. best Homes is a home construction company with headquarters in Kansas City, Missouri. They construct only residential homes throughout the U.S. and only new homes. Their reputation is based on building quality homes at a competitive price. Forecasting the correct demand for new home construction is a challenging task.
Professor’s Guidance
- All forecasting methods include errors, which can only be determined when the actual data become available. The challenge remains to estimate the error in advance. The decomposition approach is a good beginning, but it has to be expanded to get reasonable results on estimating the error associated with a sales forecast. I expect that you incorporate my guidance in your thinking and address the technique at least in concept. If you do not see the possibility to address this task within the questions specified by the case study text, then create a separate answer for forecast error assessment.
Answers must be well thought-out and in discussion format. Short one-liner answers are not sufficient.
- Answer the questions at the end of the Case Synopsis and Purpose
- Repeat each question ahead of your answer
- Use headings to separate the response to each question
- Make sure you answer each question
- Follow APA style, with at least 3 references