Global operations management

Introduction
In most cases, organizations use a wide range of forecasting approaches to assess growth as well as expected sales volume in the coming period. However, forecasting is not limited to sales volume rather it is regularly employed to evaluate other essential aspects that depend on particular indicators and likely to vary; increase or decrease within a given time frame. In addition, forecasting is conducted at several levels to assist organizations in decision making (Loader, 2006).
Moving Averages
Even though, there are several techniques used in assessing forecasted sales; one of the widely used as well as reliable approaches is moving averages (Loader, 2006). This is because this method show successive period of sales volume will either more or less similar to the past previous periods. With respect to BC Floral Shop, it is evident that sales are close to average.  Moving averages are related to normal averages because the same technique is used in evaluating the mean value. Nevertheless, the main difference is that moving averages are assessed for particular periods, rather the entire period, for instance 3 moving averages is calculated averages of 3 consecutive months and so forth. Similarly, 5 moving averages are calculated in the same case.  The following table indicates 3 and 5 period moving averages.

Every moving average is evaluated by calculating the average of the last 3 or 5 period (in this case, days). For instance, the three periods moving average of day 4 is calculated by using the average daily sales of day one to three. Consequently, five period moving averages of day 6 is calculated by using the average sales of day 1 to day 5. The forecasted sale of day 13 is 163.25 units based on 3 moving averages. The graph indicates daily sales volume and moving average trend line. The importance of using long time frame is that the new information has less influence and therefore the forecasts from period to the next will not significantly change. However, using long time frame is challenging because the forecasts are slow to respond to changes of demand. Therefore, we could have determined errors (Loader, 2006). From the graph, it is evident that that moving averages smooth out fluctuations in the daily sales volume. Additionally, as the moving averages increases, smoothness in average trend line increases as well.

References

Loader, D. (2006). Fundamentals of Global Operations Management, 2nd Edition Wiley   publishers.

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