Napa Valley Winery Inc
Quintal realized that the quantity of red table wine produced is closely associated to the sales. Ms. Quintal reviewed her past sales in order to predict future sales based on the amount of wine produced in 2008. The issue Quintal faced was the seasonality of wine sales; December being its peak time in sales. After careful consideration, Quintal determined that although her previous forecasting method had worked from an operational standpoint, however, there was still room to improve its accuracy.
Quintal has to determine what the forecasting profits will be for the next 16 months (Septet’s to DCE 2009) prior to the conclusion of any business deals with Transcontinental. The software that was used in order to predict the future sales was Stools. Stools provided me with four different methods (Moving Averages, Simple, Halt’s & Winters’ exponential smoothing) of forecasting to identify the most accurate prediction possible. With a Means Absolute Percentage Error (MAPS) of 3. 72% the Halt’s exponential smoothing method was determined to be the best method of predicting monthly wine sales for the next sixteen months (Figure 2).
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Background/Additional Research on Nap Valley Wineries The Nap valley is known for its stylish and exquisite wine blends. The highly acclaimed Paradox Winery was founded in 1994 and its current wine maker is David Marches’. Paradox is the only winery that is truly devoted to wine blends in the Nap Valley. Paradox has four different estates that produce grapes with distinct attributes that reflect the variations in soil, terrain, micrometer, and exposure. This vineyard has created a blend of zinfandel, Cabernet Sauvignon, along with smaller amounts of Merlot and Petite Sarah to create the first Paradox vintage.
One of Paradox’s quality wines is the 2006 Postmark Monitor Ledge Vineyard Red Wine. This lend of Zinfandel paired with Cabernet Sauvignon and Merlot originates solely from our Monitor Ledge Vineyard which is known for producing concentrated and structured wines. This wine highlights red cherry and rose petal aromas, with notes of blueberry, blackberry, smoky cedar and cola. The flavors of the red fruit and warm blackberry with a dash of cinnamon spice. Analyzing the Problem The data used was gathered from previous sales from Jan. 2000 through Gauge. 2008.
This data will be used in forecasting sixteen month time period starting with Septet. 2008 and all of 2009 wine sales. The forecasting tool used was Stools, which eloped in determining the total wine sales for the next sixteen months. The question that will be addressed: What is Northern Nap Valley Winners projected sales for the upcoming sixteen months? To better answer this question there are four different methods of forecasting (Figure 5 Moving Averages, Figure 4 Simple, Figurer Halt’s & Figure 3 Winters’ Exponential Smoothing) that will be used, of those four one will give the best prediction based on the past data.
Forecasting methods where done dissocialized. The Mean Absolute Percentage Error is important when forecasting data. The closer the MAPS is to zero the more accurate the forecast. This will be the catalyst in determining the accuracy of the forecasts. Runs test (Null Hypothesis of Randomness) Prior to doing any forecasting it is important to determine whether or not the data is random or nonrandom. The software used to conduct the Runs Test for Randomness was Stool’s. This test was used in order to determine if there were too many or too few runs in a series of data.
Figure 5: Moving Averages I I Forecasting Constant I Forecast I Span 13 Mean Abs Err 1683. 03 631. 59 I I Moving Averages 1460. 00 1480. 16 I Root Mean Sq Err 14. 12% By using Stools a graph was formulated to show the fluctuation of sales from Jan 2000 through DCE. 2009. The moving average in this case for the next sixteen months produced a MAPS of 4. 12%. A MAPS of is considered to be very good so 4. 12% has limited forecasting errors and would be considered an excellent forecast. Although, the MAPS for the moving average was considerably accurate, the Halt’s method produced a MAPS of 3. 2% which indicative of a more accurate forecast. The difference between the Moving Averages method and the Halt’s method is the MAPS of . 4%, which makes the Moving Average less accurate than the Halt’s Exponential Smoothing Method. Conclusion and Recommendation It is apparent that wine sales fluctuate monthly which could be based upon changes in the economy, climate, or preference. Annual forecasting is not conducive to wine sales since wine fluctuates on a monthly basis. An example of wine lactating would be in August sales are low but, in sales are at its peak.
Ms. Quintal should forecast future sales on a monthly basis in order to maintain a more accurate account sales activity. It is recommended that Ms. Quintal utilize Stools as a means of automating her forecasting task and maintaining continuity of records. According to the sixteen month forecast the amount of wine produced is closely related to the amount of wine sold. Reference Nap valley wineries. (2011, November 16). Retrieved from http:// www. Banqueters. Com/nap_valley_wineries. HTML (2011, November 16). Retrieved from http://www. Wisped. Org/