Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?
$$\begin{array} { c c c c c c }
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,000,000 & \$ 2,000,000 & \$ 1,700,000 & \$ 1,800,000 & \$ 2,200,000
\end{array}$$
A) $1,000,000
B) $1,740,000
C) $1,925,000
D) $2,200,000

Question

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?
$$\begin{array} { c c c c c c } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,000,000 & \$ 2,000,000 & \$ 1,700,000 & \$ 1,800,000 & \$ 2,200,000
\end{array}$$
A) $1,000,000
B) $1,740,000
C) $1,925,000
D) $2,200,000

Quizplus · Accepted Answer

The naïve approach to forecasting simply assumes that the actual sales in the most recent period will be the sales in the next period. Therefore, since the sales in 2017 were $2,200,000, the forecast for next year's sales would also be $2,200,000.

Suppose a Firm Has Had the Historical Sales Figures Shown