Cierra Combs Yanzi Meng Brad Schlosser

Walmart in Mexico
Introduction The motivation for the study on hand is to predict May 2009s sales for Wal-Mart in Mexico by forecasting. Different types of forecasts will be tested to see which one will accurately predict future sales for Wal-Mart. This report is mainly important to the managerial accounting department in Wal-Mart in Mexico. It would also provide the data necessary to show what preparations Wal-Mart management in Mexico needs to make to prepare for May 2009. Data 40 data observations were collected. The X-variable is the period, which is the month in this case. The Y-variable is the monthly sales of Wal-Mart in Mexico from Jan 2006 to April 2009, this is measured in millions of dollars. The data was collected from the following website, http://phx.corporate-ir.net/phoenix.zhtml?c=130639&p=irol-sales Preliminary Analysis The following graph depicts the sales of Wal-Mart in millions of dollars (Y-axis) over a 40 month period (X-axis).
35000 30000 Sales in Millions of Dollars 25000 20000 15000 10000 5000 0 0 10 20 Months 30 40 50 $ Millions True Sales

$ Millions True Sales

The graph below depicts the same information in a line styled graph.
35000 30000 Sales in Millions of Dollars 25000 20000 15000 10000 5000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 Months Months Period $ Millions True Sales

Sales

These graphs show the relationship between our x variable (months) and our y variable (sales in millions of dollars). The data shows a positive correlation between the two, simply meaning as one variable increases, so does the other. The scatter plots do show possible outliers, however these outliers continuously happen in month 12 of every year so it is a very obvious that for the month of December, the seasonal trend is that sales of Wal-Mart increase dramatically. Forecasting When forecasting for the methods found in the spreadsheet, data was pulled from our spreadsheet analysis to form the regression models for the following forecasts. The data important to the model is listed below as well as where that data fits in the forecasting function to develop the forecast for May 2009. The graphs below each forecast show the differences between the actual and the forecasted sales for May 2009. Forecasting with Regression Model x=41 period=194.7193246 intercept=14515.60385

Forecast for May 2009= 194.7193246(41) + 14515.60385

Forecast for May 2009= 22,499.09

35000 30000 Sales in Millions of Dollars 25000 20000 15000

Regression

Actual Sales 10000 5000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 Months Series2

With this form of forecasting the regression cannot adapt to the trends of the data involved. The data is analyzed correctly in the terms of the positive correlation between the variable but would not be best for the type of data we have here.

Forecasting with Classical Decomposition X=41 period= 177.6105814 intercept= 14921.10605

Forecast for May 2009= 177.6105814(41) + 14921.10605 Forecast for May 2009= 22,203.13

35000.00 30000.00 Sales in Millions of Dollars 25000.00 20000.00 15000.00 10000.00 5000.00 0.00

Classical Decomposition

Predicted Y Actual Sales

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Months

Classical decomposition forecasts the predicted sales correctly and allows us to see the type of trend going on here. Above we see the forecast with an alpha of 0.2. The forecast seems to be fairly accurate with this type of data, and is in fact the best form of forecasting for us to use with this data.

Forecasting with Exponential Smoothing Alpha= 0.2 Actual April Sales= 21137 Predicted April Sales= 21283.0435 Forecast for May 2009= 21137(0.2) + 21283.0435 Forecast for May 2009= 21253.8348
35000 Sales in Millions of Dollars 30000 25000 20000 15000 10000 5000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 Months Series1 Series2

Exponential Smoothing

The graph above shows our predicted values from exponential smoothing in relation to our actual sales. Like the regression model, exponential smoothing lacks the ability to accurately predict the data on hand. The following is a graph of Actual Sales VS. Forecast Sales monthly sales in million dollars 35000
30000 25000 20000 15000 10000 5000 0 0 5 10 15 20 25 30 35 40 45 Sales(Y) Predicted Y

Actual sales VS. Forecast Sales

Walmart in Mexico

months

Evaluation Naive 3-Period Moving Average SES BIAS 151.0769 374.87 MAD 2481.333 2297.36 MAPE 12.03% 10.84% MSE SE 16158283 4019.737 14614320.03 3822.87

770.36344

1704.2254

7.83%

11689532.5

3418.9958

Conclusion
After forecasting with different methods as seen on the spreadsheet attached and throughout this report, it can be seen that the best way to predict the sales for the data on hand is by using classical decomposition. Classical decomposition produced a predicted sales value in millions of dollars of 22,203.13. This forecast is the value that most accurately depicts Wal-Marts predicted sales for the month of May 2009.