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The company’s current advertising budget is $162 million and since there is a direct correlation to advertising and sales this has been increased to 167 million.
Next we looked at two averaging models, the simple and the k-period. For the data required, we found that a 2 year k-period model was the best fit and then were able to determine that production levels should be increased. Based on the data from the models, I recommended that production levels be increased to 48 million units.
Myra stated that the sales forecasts allowed her to fix the production levels and my help in accurately estimating the needed levels to maintain a 10 percent inventory stock would then be required...
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