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YU EMBA – Final Assessment – DVD Case Study

NAME_____________________________________ Estimated Time: 3h

ID_____________________ GRADE(%)

NOTA:

– (1) Periods of analysis are different from one question to another.

– (2) Some questions are interdependent

– (3) We assume the statistics for month M-1 are available month M.

INSTRUCTIONS:

– (1) Use the EXCEL spreadsheet provided to answer the questions.

– (2) Fill the yellow spaces with your answers.

– (3) Save the Word file with a pdf extension, name the file as StudentsID.pdf (eg: 201612456.pdf), name the EXCEL file the same way and send it to dcoutton@inseec.com

Currently the DVD technology is known as a universal standard to store data, but this technology is recent, since the first DVD players entered the US market in 1997 only.

The following monthly sales statistics were recorded from March 1997 and are published by the Consumer Electronic Association. Those figures about the sales of DVD players in the USA are considered as reliable.

QUESTION 1: Data analysis (30%)

We are currently in APRIL 1998, on the behalf of the Consumer Electronic Association, you are asked to observe and describe the sales (volume) from the 12 first months, using EXCEL.

1.1. Can you use those statistics to forecast the number of units sold (justify your answer)? Can DVD manufacturers be optimistic (justify your answer)?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

We are now in JANUARY 1999 and you observe the DVD sales figures for the past 21 months.

1.2. Describe the sales trend.

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 1.3. Find the trend equation that best fit the figures for the period APRIL 1997 – DECEMBER 1998 (included) and the determination coefficient for the regression analysis.

Equation:_________________________________________________________________________

Determination coefficient R² =_______________________________________________________

1.4. What is the seasonality, if any (justify your answer)?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

QUESTION 2: Forecasting 1999 sales (20%)

We are still in JANUARY 1999, and we are in the position to forecast the DVD player annual sales volume using a multiplicative model with the following assumptions:

– The seasonality coefficients are the same as the similar period for the past season

– The trend equation is known to be: y = 20000 e(0,1 x)

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2.1. What is the 1999 sales volume forecast?

Sales volume (1999) =_______________________________________________________________

2.2. What is the sales volume for December 1999 and the seasonality coefficient?

Sales volume (December 1999) =______________________________________________________

Seasonality coefficient (December 1999) =______________________________________________

QUESTION 3: Forecasting 2002 sales (40%)

We are now in JULY 2002, and you wish to use the complete time series (April 1997 to June 2002) to forecast the last 6 months for the year 2002 (periods 64 to 69). You choose to apply an additive model to prepare the forecast and to use the trend line computed with a linear regression for periods 1 to 63.

3.1. What are the seasonality coefficients, assuming that they are supposed to be the average of the seasonality coefficients for similar periods of the past TWO seasons?

3.2. What is the sales forecast (units sold) for the 2002 (from January to December).

Sales forecast (units sold) for 2002:____________________________________________________

3.3. Applying the same coefficients as those computed for Question 3.1, forecast sales for 2003 and 2004?

Sales forecast (units sold) for 2003:____________________________________________________

Sales forecast (units sold) for 2004:____________________________________________________

3.4. What is (are) the reason(s) your 2004 sales forecast is above the actual observed data (Table 2)?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

QUESTION 4: Selling price forecast for 2005 (4 points)

We are currently at the beginning of 2005, since the DVD players selling price is decreasing, your objective is to forecast the selling price for 2005.

4.1. Among the QUALITATIVE forecast methods (individual judgment, panel, historic analogy, market study, Delphi), what is the most suited methods (justify your answer)?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4.2. If the trend computed for the period 1997-2004 is applied for 2005, what is the best regression (trend equation) and what is the selling price forecast for 2005?

Trend equation:____________________________________________________________________

Selling price forecast:_______________________________________________________________

4.3. From the graph observation, what price range seems to be the most suited?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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