Exhibit 15.

5 - Simple Moving Average

Simple
Moving Averages
Week Demand 3 Week 9 Week
1 800 Actual Demand
2 1,400 3-wk and 9-wk Simple Moving Averages
3-Wk Moving Av
3 1,000 9-Wk Moving Av
4 1,500 1,067 1,067 3,000
5 1,500 1,300
6 1,300 1,333
2,500
7 1,800 1,433

Demand
8 1,700 1,533
9 1,300 1,600 2,000
10 1,700 1,600 1,367
11 1,700 1,567 1,467
1,500
12 1,500 1,567 1,500
13 2,300 1,633 1,556
14 2,300 1,833 1,644 1,000
15 2,000 2,033 1,733
16 1,700 2,200 1,811
500
17 1,800 2,000 1,800
18 2,200 1,833 1,811
19 1,900 1,900 1,911 0
20 2,400 1,967 1,933 0 4 8 12 16 20 24 28
21 2,400 2,167 2,011 Week
22 2,600 2,233 2,111
23 2,000 2,467 2,144
24 2,500 2,333 2,111
25 2,600 2,367 2,167
26 2,200 2,367 2,267
27 2,200 2,433 2,311
28 2,500 2,333 2,311
29 2,400 2,300 2,378
30 2,100 2,367 2,378
 Actual Demand
3-wk and 9-wk Simple Moving Averages
3-Wk Moving Average
9-Wk Moving Average
3,000

2,500
Demand

2,000

1,500

1,000

500

0
0 4 8 12 16 20 24 28 32

Week
Exhibit 15.8

Demand Deviation Sum of TS=RSFE/M

Month Actual RSFE Abs. Dev. MAD*
Forecast (Error) Abs. Dev. AD
1 1,000 950
2 1,000 1,070
3 1,000 1,100
4 1,000 960
5 1,000 1,090
6 1,000 1,050

0.0 = Mean Absolute Deviation

#DIV/0! = Tracking Signal

2.394 = 3-sigma Upper Control Limit

-2.394 = 3-sigma Lower Control Limit

0 2.394 -2.394 Tracking Signals

7 2.394 -2.394 Upper Control Limit
Tracking Signals
Lower Control
Tracking Signal

Limits
+5
+4
+3
+2
+1
+0
-1
-2
-3
-4
-5
0 1 2 3 4 5 6 7
Month
-2
-3
-4
-5
0 1 2 3 4 5 6 7
Month
Exhibit 15.11 - Least Squares Regression Analysis

(1) (2) (3) (4) (5) (6)

x y xy x2 y2 Ŷ
1 600
2 1,550
3 1,500
4 1,500
5 2,400
6 3,100
7 2,600
8 2,900
9 3,800
10 4,500
11 4,000
12 4,900

78 33,350 0 0 0

6.50 = X-bar 427.56 =b

2779.17 = Y-bar 0.00 =a

Regression Equation is Y = 0.00 + 427.6*x

Exhibit 15.10 Least Squares Regression Line

6,000

5,000
Sales

4,000

3,000

2,000

1,000

0
0 2 4 6 8 10 12 14
Quarters
res Regression Line

4 6 8 10 12 14
Quarters
Exhibit 15.12 - Excel Regression Tool

Quarter Sales
1 600
2 1,550
3 1,500
4 1,500
5 2,400
6 3,100
7 2,600
8 2,900
9 3,800
10 4,500
11 4,000
12 4,900

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.9660156
R Square 0.9331861
Adjusted R Square 0.9265047
Standard Error 363.8778
Observations 12

ANOVA
df SS MS F Significance F
Regression 1 18493221 18493221 139.66946 3.372024E-07
Residual 10 1324071 132407.05
Total 11 19817292

Coefficients
Standard Error t Stat P-value Lower 95% Upper 95%Lower 95.0%
Intercept 441.66667 223.9513 1.9721549 0.0768687 -57.328018732 940.66135 -57.32802
X Variable 1 359.61538 30.42899 11.818183 3.372E-07 291.81535792 427.41541 291.81536
Upper 95.0%
940.66135
427.41541
Exhibit 15.13 - Additive/multiplicative seasonal variation

Additive Multiplicative
1.4
Index Index
Trend Line
0.95 1 -70 70 0.93 Time Series Plot - Additive vs. Multiplicative
Additive Seasonal
0.9 2 -140 0.86 Seasonalized Demands
0.8 3 -280 0.72 Multiplicative Seasonal
0.6 4 -420 0.44 Demand
0.8 5 -280 0.72 6000
0.9 6 -140 0.86

Demand
1.1 7 140 1.14 5000
1.2 8 280 1.28
1.4 9 420 1.56 4000
1.2 10 280 1.28
1.1 11 140 1.14 3000
1.05 12 70 1.07
2000
Additive Additive Multiplicative Multiplicative
Month Trendline Index Demand Index Demand
1000
1 1000 -70 930 0.93 930
2 1050 -140 910 0.86 903
0
3 1100 -280 820 0.72 792
0 10 20 30 40 50 60
4 1150 -420 730 0.44 506
5 1200 -280 920 0.72 864 Month
6 1250 -140 1110 0.86 1075
7 1300 140 1440 1.14 1482
8 1350 280 1630 1.28 1728
9 1400 420 1820 1.56 2184
10 1450 280 1730 1.28 1856
11 1500 140 1640 1.14 1710
12 1550 70 1620 1.07 1658.5
13 1600 -70 1530 0.93 1488
14 1650 -140 1510 0.86 1419
15 1700 -280 1420 0.72 1224
16 1750 -420 1330 0.44 770
17 1800 -280 1520 0.72 1296
18 1850 -140 1710 0.86 1591
19 1900 140 2040 1.14 2166
20 1950 280 2230 1.28 2496
21 2000 420 2420 1.56 3120
22 2050 280 2330 1.28 2624
23 2100 140 2240 1.14 2394
24 2150 70 2220 1.07 2300.5
25 2200 -70 2130 0.93 2046
26 2250 -140 2110 0.86 1935
27 2300 -280 2020 0.72 1656
28 2350 -420 1930 0.44 1034
29 2400 -280 2120 0.72 1728
30 2450 -140 2310 0.86 2107
31 2500 140 2640 1.14 2850
32 2550 280 2830 1.28 3264
33 2600 420 3020 1.56 4056
34 2650 280 2930 1.28 3392
35 2700 140 2840 1.14 3078
36 2750 70 2820 1.07 2942.5
37 2800 -70 2730 0.93 2604
38 2850 -140 2710 0.86 2451
39 2900 -280 2620 0.72 2088
40 2950 -420 2530 0.44 1298
41 3000 -280 2720 0.72 2160
42 3050 -140 2910 0.86 2623
43 3100 140 3240 1.14 3534
44 3150 280 3430 1.28 4032
45 3200 420 3620 1.56 4992
46 3250 280 3530 1.28 4160
47 3300 140 3440 1.14 3762
48 3350 70 3420 1.07 3584.5
Exhibit 15.14 - Computing a Seasonal Factor from Actual Data and Trend Line

Seasonal
Factor (Ave. of
Actual From Trend Ratio of Same Qtrs in
Amount Equation Actual/Trend Both Years)
Tt = 170 + 55t
2006 I 300 170 1.76 I 2.41
II 200 170 1.18 II 1.82
III 220 170 1.29 III 1.82
IV 530 170 3.12 IV 3.62
2007 I 520 170 3.06
II 420 170 2.47
III 400 170 2.35
IV 700 170 4.12

600

500

400

300

200

100

0
I II III IV I II
Quarter, By Year
Exhibit 15.15 - Deseasonalized Demand

(1) (2) (3) (4) (5) (6) (7)

Average of the
Actual Same Qtr of Seasonal Deseas. Demand
Amount Each Year Factor (yd) x2

Period (x) Qtr (y) Col. (3) / Col.(5) (Col. 1)2

1 I 600 2,266.7 0.82 735.7 1
2 II 1,550 3,050.0 1.10 1,412.4 4
3 III 1,500 2,700.0 0.97 1,544.0 9
4 IV 1,500 3,100.0 1.12 1,344.8 16
5 I 2,400 0.82 2,942.6 25
6 II 3,100 1.10 2,824.7 36
7 III 2,600 0.97 2,676.2 49
8 2,900 1.12 2,599.9 64
9 3,800 0.82 4,659.2 81
10 4,500 1.10 4,100.4 100
11 4,000 0.97 4,117.3 121
12 4,900 1.12 4,392.9 144

78 33,350 12.00 33,350.0 650

Exhibit 15.16 - Straight Line Graph of Deseasonalized Equation

Original Data
Linear (Original Data)
Deseasonalized Data
6,000

5,000
Demand

f(x) = 359.615384615385 x + 441.666666666667

4,000

3,000

2,000

1,000

-
0 2 4 6 8 10 12 14
Quarters
1,000

-
0 2 4 6 8 10 12 14
Quarters
 (8)

x × yd
Col. (1) × Col.
(6)
735.7
2,824.7
4,631.9
5,379.0
14,713.2
16,948.4
18,733.6
20,798.9
41,932.7
41,004.1
45,290.1
52,714.5

265,707.0

Original Data
Linear (Original Data)
Deseasonalized Data

12 14
12 14
Exhibit 15.18 - Causal Relationship: Sales to Housing Starts

Number of
Sales (in Sq.
Year Housing Start
Yds.)
Permits
1999 18 13,000
2000 15 12,000
2001 12 11,000
2002 10 10,000 The regression analysis below uses the regression procedure that
2003 20 14,000 is accessed from the "Data Analysis" package tha t is an addin to
2004 28 16,000 Excel.
2005 35 19,000
2006 30 17,000
2007 20 13,000

SUMMARY OUTPUT
Sales (sq. yrds.)

20,000
Regression Statistics
18,000
Multiple R 0.994385682416
16,000 R Square 0.988802885395
Adjusted R Square 0.987203297594
14,000
Standard Error 331.9545545315
12,000 Observations 9
10,000
ANOVA
8,000 df SS
6,000 Regression 1 68117532.1
Residual 7 771356.7839
4,000 Total 8 68888888.89
2,000
Coefficients Standard Error
0
Intercept 6698.492 309.648
5 10 15 20 25 30 35 40
X Variable 1 344.221 13.845
Number of Housing Start Permits
2,000

0
5 10 15 20 25 30 35 40
Number of Housing Start Permits
ession analysis below uses the regression procedure that
ed from the "Data Analysis" package tha t is an addin to

MS F Significance F
68117532.1 618.1610568 0.000000
110193.8263

t Stat P-value Lower 95% Upper 95%Lower 95.0%

Upper 95.0%
21.633 0.000 5966.292 7430.693 5966.292 7430.693
24.863 0.000 311.483 376.959 311.483 376.959
Solved Problem 1

4 Weeks Ago 3 Weeks Ago 2 Weeks Ago Last Week

Monday 2,200 2,400 2,300 2,400
Tuesday 2,000 2,100 2,200 2,200
Wednesday 2,300 2,400 2,300 2,500
Thursday 1,800 1,900 1,800 2,000
Friday 1,900 1,800 2,100 2,000
Saturday
Sunday 2800 2700 3000 2900

Solution:

(a) Simple 4-wk Moving Average

Simple 4-wk
Moving
4 Weeks Ago 3 Weeks Ago 2 Weeks Ago Last Week Average
Monday 2,200 2,400 2,300 2,400 2,325
Tuesday 2,000 2,100 2,200 2,200 2,125
Wednesday 2,300 2,400 2,300 2,500 2,375
Thursday 1,800 1,900 1,800 2,000 1,875
Friday 1,900 1,800 2,100 2,000 1,950
Saturday
Sunday 2800 2700 3000 2900 2,850

(b) Weighted Average

Weighted
Solution Weights Moving
0.10 0.20 0.30 0.40 Average
Monday 220 480 690 960 = 2,350
Tuesday 200 420 660 880 = 2,160
Wednesday 230 480 690 1,000 = 2,400
Thursday 180 380 540 800 = 1,900
Friday 190 360 630 800 = 1,980
Saturday
Sunday 280 540 900 1,160 = 2,880
1,300 2,660 4,110 5,600 = 13,670
Solved Problem 3

Period Actual Forecast

October 700 660
November 760 840
December 780 750
January 790 835
February 850 910
March 950 890

Solution
Cumulative
Actual Forecast Actual Absolute Sum of
Deviation
Demand Demand Deviation Deviation Abs. Dev.
(RSFE)
October 700 660 40 40 40
November 760 840 -80 -40 80
December 780 750 30 -10 30
January 790 835 -45 -55 45
February 850 910 -60 -115 60
March 950 890 60 -55 60

315 RSFE -55

n 6
DMA 52.5 TS -1.047619

-55 315

MAD = 315 / 6 = 52.5

Tracking Signal = -55 / 52.5 = -1.05

Solved Problem 4

(1) (2) (3) (4) (5) (6)

x y xy x2 y2 Ŷ
Deseasonalized
Period Demand
1 569.0
2 564.1
3 578.9
4 587.8
5 789.0
6 793.9
7 779.1
8 770.0

36 5,432 0 0 0

4.50 = X-bar
678.97 = Y-bar
150.88 = b
0.00 = a

Regression Equation is Y = 0.00 + 150.9*X

900.0

800.0

700.0
Demand

600.0

500.0

400.0

300.0

200.0
Actual Data
100.0 Trend Data

0.0
0 1 2 3 4 5 6 7 8 9

Period
300.0

200.0
Actual Data
100.0 Trend Data

0.0
0 1 2 3 4 5 6 7 8 9

Period
 DESEASONALIZED SEASONALIZED
FORECAST FORECAST

x Seasonal
Period yd Factor ys
9 1357.9 0.527 715.64
10 1508.8 0.957 1443.95
11 1659.7 1.529 2537.70
12 1810.6 0.987 1787.06

Actual Data
Trend Data

4 5 6 7 8 9

Period
 Actual Data
Trend Data

4 5 6 7 8 9

Period