Coursework 3 - Forecasting Page 1

STX4271: Coursework 3 –
Forecasting
This coursework accounts for 50% of the total mark for the module and will require
you to apply the forecasting techniques considered on this module, as well as others
which you may read about, to a time-series data set which will be unique to you.

For the purposes of this coursework you need to put yourself in the position of a
consultant who has been retained by a company to forecast future sales to inform its
decision making processes. The company is fictitious but you have been told that
the company sells MP3 players and peripherals – additional products that support or
enhance the enjoyment of the players. The company details are as follows:

Hendon Muzactotum PLC

Derby Way
Leeds
LE4 8BA

The company has four outlets in North West London and is currently considering
expanding. To inform this decision the company needs to forecast sales for the year
2011.

You have been provided with quarterly sales data for the last 2 quarters of 1997, up
to and including quarter 1 of 2011. You are required to use this data to forecast
company sales for the second and third quarter of 2011.

STX4271 Zainab Kazim

2010/2011 Middlesex University Business School
Coursework 3 - Forecasting Page 2

Completing the coursework

You will need to complete this coursework in two parts as explained below.

Part A: Evaluating Log onto OASIS and copy your data from the file ‘Stx4271 Coursework Data 2010
forecasts 2011’ in the assessment area of the module. Make sure you copy the correct data
column as no marks will be given if you work on the wrong data set. You will need
to evaluate forecasts from this data for the second and third quarter of 2011. To do
this you will need to complete the analysis as briefly explained below.

• Complete an exploratory data analysis of your time-series including plots and

summary statistics. At this stage you should be looking for potential problems in
the data set and be aiming to summarise its main time series features.

• Split the data set into two parts by removing the data for 2009 quarter 3 onwards.
You should then have a large data set with sales figures for quarter 3 of 1997, up
to and including quarter 2 of 2009, and a smaller data set with only seven sales
figures corresponding to quarter 3 of 2009 through to quarter 1 of 2011.

• Use the data set of sales from quarter 3 of 1997, up to and including quarter 2 of
2009 to forecast the sales for the next seven quarters, corresponding to the actual
values in the smaller data set. I will be expecting you to apply three appropriate
forecasting methods that you have learned on the module.

• Compare your forecasts to the actual sales figures for quarter 3 of 2009 through to
quarter 1 of 2011. Evaluate and compare how well each of the forecasting
methods you have used has performed, and assess their appropriateness and any
limitations to their use. Then make a recommendation as to which method
should be used to forecast sales for the second and third quarter of 2011.

• Using your preferred method produce two forecasts for the second and third
quarter of 2011. You will need to use the whole data set (quarter 3 of 1997 to
quarter 1 of 2011) to *estimate the model* and then produce forecasts.

You can use Minitab or Excel to complete this work.

STX4271 Zainab Kazim

2010/2011 Middlesex University Business School
Coursework 3 - Forecasting Page 3

Part B: For this part of the coursework you will need to discuss the issues surrounding
Forecasting implementing and managing this forecasting exercise in the context of this problem.
process You will need to read around the topic of forecasting to fully answer this part as you
have only considered this briefly in lectures. You will need to consider issues such
as:
• The quality of the data;
• Do you have adequate information or do you need more?
• Are there staff in the company you would need to consult in evaluating this
forecast?
• How should this forecast be presented, and what are its strengths and
weaknesses in terms of how it will be used in the decision process etc?
This is not an exhaustive list. You need to show evidence that you have read around
and beyond the lecture material, and your discussion should be in the context of the
problem.

 Interim report – feedback opportunity

You may submit a draft of your work by week 23 (Tuesday 5th April) if you would
like feedback on what you have done up to that point.

 Final report
Your coursework should be presented using the following format.
All pages must be A4 in size and be numbered and clearly headed. You should
never begin a sentence at the bottom of one page and finish it at the top of the next.
Similarly a table should not be split over two pages. In either case it looks
unprofessional.
You will need to decide whether to present computer output in an appendix or in the
main body of the report. As a guide, output which is important to the discussion –
such as time series graphs – should be presented in the main report. Details of a
model fit – such as an Excel spreadsheet – should be included in an appendix and
summarised in the main report. Appendices should be clearly named and referenced
in the ‘Table of Contents’. You may decide not to use any appendices, similarly you
may have more than one appendix.
All references must be clearly cited.

STX4271 Zainab Kazim

2010/2011 Middlesex University Business School
Coursework 3 - Forecasting Page 4

The following items should be included in your report in the order indicated below.

Title page This has your name, student number, module number and module leaders name on
etc but no discussion or calculations.

Management This is usually in the form of a one-page letter, with no technical information and in
report good English. If the client does not understand this management report it will be
‘binned’ so it is important that this one page is very clear and precise, that it contains
no ‘waffle’, and that it highlights very clearly the major results the client wants to
see. It should be presented in a format and language that the client can understand, it
must make no assumptions (since these would have been cleared up with the client
beforehand) and should not describe the problem, except possibly in the very
shortest of terms (in at most ten words). You can use the sample report attached to
this coursework as a guide but you must use your own words. If you simply repeat
the words and phrases in the sample report you will be severely marked down. Note
also that the client’s name, address etc must be correct, and that the details you give
of yourself must be full, consistent and clear. (You can make these up if you wish.)

Table of contents This is a one-page list of the key sections in the document. All pages must be
numbered. If you use appendices in your document their names in the contents page
must give a good idea of their contents, so don’t just call them ‘Appendix 1’ etc.

Technical report This is essentially a formal write-up of your analysis for Part A. This should begin
with a brief overview of the problem and an appropriate description of your data
(you do not need to list the data here, but may do so in an appendix). The report
must then flow in a natural order through your analysis of the data. You may decide
to include relevant computer output in the technical report or refer to it in an
appendix. A table summarising your results and conclusions should be provided.
The report should draw attention to the fact that several alternative forecasts have
been generated and explain clearly how you chose the best method. You may also
want to include a section explaining any differences you would have made to this
analysis or any further analysis you feel may be appropriate. This should not be a
theoretical report – i.e. I do not expect to see an explanation of the theoretical detail
associated with the methods you are using.

Management This will contain your answer to Part B of the coursework. It should consist only of
process a couple of pages.

Appendices This may contain details of the analyses.

Marking scheme
STX4271 Zainab Kazim
2010/2011 Middlesex University Business School
Coursework 3 - Forecasting Page 5

A guide to the way the marks will be allocated is as follows:

Management Must be a clear and concise letter to the client, in good English, well word processed
report and uncluttered; presenting clear and unambiguous information.

10 marks

Technical report Are the calculation, discussions, conclusion etc clear and accurate? Does it have a
brief introduction and suitable summary at the end? Are there sensible suggestions
for further analysis? Are the methods used appropriate, and have any problems or
limitations been adequately discussed?

60 marks

Management Have you demonstrated a full consideration of managing the stages in the forecasting
process process and how they relate to the context of this problem?

20 marks

Presentation Is the report presented in the correct order with a logical flow of discussion in the
technical report? Does the report have a professional appearance - appendices
clearly and correctly referenced etc?

10 marks

Due Date
Your completed report must be handed into the student office by 5pm on Monday 2nd
May 2011.

It is essential that there must be absolutely no evidence of copying, so no two

reports may use similar wording or identical layout in any section. Similarly all
references must be clearly cited. Evidence of over-collaboration will result in a
penalty being applied to the final mark.

STX4271 Zainab Kazim

2010/2011 Middlesex University Business School
Coursework 3 - Forecasting Page 6

Forecasting Project Mark Breakdown

Management Report (10)

Exploratory Data Analysis (10)

Producing forecasts (25)

- Holt Winters

- Regression

Additional methods (10)

- ARIMA

OR

- Time Series Decomposition

Compare forecasts (data and method selection) (10)

Future forecasts (5)

Indication of stages (10)

Discussion in context (10)

Presentation (10)

STX4271 Zainab Kazim

2010/2011 Middlesex University Business School