Forecasting Indices

The following figure is taken from sales data of sporting goods, graphed over the last four years, showing worldwide demand for wave and ski boards combined. Each line on the graphic shows combined sales of wave and ski boards. The significant ramp in sales throughout March and April are attributable to the launch of each seasons' new wave boards. The spoke in sales in October are attributable to ski board sales ramping on a seasonal basis. In aggregate the market continues to grow for these products, generating a compound annual growth rate (CAGR) for the four years of 4.76%. Using averaging based on four periods generates the Averaging line shown in the following graphic.

Forecasting Analysis

A relatively simplistic approach to defining year 5's inventory doesn't necessarily capture the variation in forecasts over the four previous years. As can be seen from the graphic on the previous page,...
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