Domestic U.S. airline fuel consumption and cost for the period January 2007 through July 2009 is shown below:

This data can be downloaded as a CSV (generic spreadsheet) file: proj2.csv

Assignment:

1) Prepare a plot that includes:

1. actual amount of fuel consumption for each month from January 2007 through July 2009
2. forecasted fuel consumption for each month from May 2007 through August 2009 using a three period moving average
3. forecasted fuel consumption for each month from February 2007 through August 2009 using exponential smoothing with alpha=(.8).

2) Along with the plot, prepare a chart (line by line) that shows all steps of each calculation for how you derived the forecast for each month.  Two charts could be started to look something like this:

MONTH	CONSUMPTION (mil. gals.)	FORECAST	calculation (3 period moving average)
JAN 2007	1062.2	----
FEB 2007	970.1	----
MAR 2007	1113.2	----
APR 2007	1075.9	1048.5	= ((1062.2 + 970.1 + 1113.2) / 3)
MAY 2007	1101.8	1053.1	= ((970.1 + 1113.2 + 1075.9) / 3)

MONTH	CONSUMPTION (mil. gals.)	FORECAST	calculation (exp. smoothing, a=.8)
JAN 2007	1062.2	----
FEB 2007	970.1	1062.2	(seed with naive forecast)
MAR 2007	1113.2	988.5	= (.8)(970.1) + (.2)(1062.2)
APR 2007	1075.9	1088.3	= (.8)(1113.2) + (.2)(988.5)

3) Prepare a formal typed memo discussing (supporting, defending) your expectations for amount of fuel consumption that will be reported for August, 2009.  Attach your calculations chart and your plot.  Your expectations for total consumption should consider not only this historical data, but must also consider commonly known issues in the marketing environment.  By "commonly known," I mean that you should not conduct any sort of external research of the marketing environment, but rather are expected to consider environmental trends in the US and worldwide about which a reasonably aware person should have familiarity.  That is, forecasting requires a lot of assumptions, and your ability to persuasively use relevant assumptions are an important part of your memo.

Your memo, no more than about a page in length, MUST contain the following elements (in order):

• statement of objective
• description of method
• discussion of facts and assumptions
• conclusions
• attachments (the plots and charts above)

Your attachments may be prepared by hand (pencil and ruler) or electronically prepared (attached to a formal, typed memo).  To submit hand drawn charts, however, you would either have to scan a PDF copy to send electronically, or would have to submit the originals by snail mail (USPS) or your own personal delivery to my office. If you send by USPS, your envelope must have been postmarked at least five calendar days before the due day if it is received in my campus mail box after the due date.  If you send electronically as an email attachment, send only ONE file; all charts, spreadsheets, and such must be made to fit as charts or tables within a single word processed document (.doc) or a PDF file.

If you have questions, be sure to post on the class discussion board (Blackboard).  Before posting any questions or comments, be sure that you have studied reading assignments relevant to the marketing environment, marketing strategy, marketing research, and forecasting.

Based on a quick look at Project 1 while printing them, I feel compelled to make the following points:

• Put your name on the first page.  In the real world, failure to identify the submitter of a bid or proposal could cost your employer hundreds of thousands of dollars in a lost opportunity and could in turn cost you your job.  Here, it will merely cost you two letter grades in exchange for the time that I have to spend trying to guess who made the submission.

• Don't add a cover page; your name on the first page is all you need.

• Follow all directions, including the required outline.  Failure to follow the required outline will cost you at least one letter grade for each section that is missing.

• As with Project 1, the text of the report should be about a page in length.  Beyond that, your grade score will be negatively correlated with length.

• The text of the report and all attachments (plots, tables) must be submitted as a single, seamless document this time.  I am assuming that at the MBA level, you have or can quickly acquire the skills to format such a document.