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?
$$\begin{array} { c c c c c c c }
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,500,000 & \$ 1,750,000 & \$ 1,400,000 & \$ 2,000,000 & 1,780,000
\end{array}$$
A) $1,780,000
B) $1,650,000
C) $2,100,000
D) $1,686,000

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?
$$\begin{array} { c c c c c c c } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,500,000 & \$ 1,750,000 & \$ 1,400,000 & \$ 2,000,000 & 1,780,000
\end{array}$$
A) $1,780,000
B) $1,650,000
C) $2,100,000
D) $1,686,000

Quizplus · Accepted Answer

The naïve approach to forecasting assumes that the most recent period's actuals will be next period's forecast. Therefore, the forecast for next year's sales would be the same as the sales figure for 2017, which is $1,780,000.

Suppose a Firm Has Had the Historical Sales Figures Shown