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Walmart Sales Forecast

This document discusses forecasting techniques and Walmart's history and use of forecasting. It examines various forecasting models including moving averages, simple exponential smoothing, and autoregressive integrated moving average (ARIMA) models. It finds that an ARIMA model incorporating trends, seasonal factors, and lagged values provided the most accurate out-of-sample forecasts. The conclusion emphasizes the importance of forecasting for planning, especially as recent data shows the highest Q4 increase in sales in 6 years.

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889 views13 pages

Walmart Sales Forecast

This document discusses forecasting techniques and Walmart's history and use of forecasting. It examines various forecasting models including moving averages, simple exponential smoothing, and autoregressive integrated moving average (ARIMA) models. It finds that an ARIMA model incorporating trends, seasonal factors, and lagged values provided the most accurate out-of-sample forecasts. The conclusion emphasizes the importance of forecasting for planning, especially as recent data shows the highest Q4 increase in sales in 6 years.

Uploaded by

ramos777
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Ann Flatt

Jared Holland
Heather Jo
Catherine Johnson
Stephen Ramos

Benefits of Forecasting
Walmart History
Forecasting Techniques
Our preferred model
Out of sample forecast
Conclusion

Profitability relies heavily on understanding:


Demand
Revenues
Costs

Reasons why forecasting is critical:


Storing inventory
Staffing decisions
Stockholders

1960s

24 stores with $12.7M in


sales

1990s

Celebrated $1B sales week


Exceeded $100 Billion in
annual sales

1970s

51 stores with $78M in


sales

Reached $1Billion in
sales
Operated 276 stores

2000s

Exceeded $400 Billion in


annual sales

1980s

2012

Serves 200 million


customers each week
Operates 10,000 stores in
27 countries

Though easy to understand, it lags behind in trend


Ignores complex relationships in data
120,000

100,000

80,000

60,000

40,000

20,000

0
1994

1996

1998

2000

2002

MA4F

2004
SALES

2006

2008

2010

2012

Similar to the moving average method of forecasting


Weighs more recent observations more heavily than
the more distant ones
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1994

1996

1998

2000
SALES

2002

2004
SALESSM

2006

2008

2010

Q1 Q4 and trend
XXX

140,000

122,000

120,000

120,000

100,000
118,000

80,000
116,000

60,000
114,000

40,000
112,000

20,000
110,000

0
1994

1996

1998

2000

2002

SALESF1

2004

2006

SALES

2008

2010

2012

2011q3

2011q4
SALESF1

2012q1
SALES

2012q2

Q1-Q4, trend and AR(1)


XXX

140,000

122,000

120,000

120,000

100,000

118,000

80,000

116,000

60,000

114,000

40,000

112,000

20,000

110,000

108,000

1994

1996

1998

2000

2002

SALESF2

2004

2006

SALES

2008

2010

2012

2011q3

2011q4
SALESF2

2012q1
SALES

2012q2

Q1-Q4, trend, AR(1) and AR(2)


XXX

140,000

122,000

120,000

120,000

100,000

118,000

80,000

116,000

60,000

114,000

40,000

112,000

20,000

110,000

108,000

1994

1996

1998

2000

2002

SALESF

2004

2006

SALES

2008

2010

2012

2011q3

2011q4
SALESF

2012q1
SALES

2012q2

Forecasting method with the lowest SIC


XXX
122,000
120,000
118,000
116,000
114,000
112,000
110,000
108,000
2011q3

2011q4
SALESF

2012q1
SALES

2012q2

$140,000

$120,000

$100,000

$80,000
Base Data
$60,000

YOY Growth
Raw Growth

$40,000

$20,000

$0

Highest Q4 increase in 6 years


Will you be ready?
Internal Factors
External Factors

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