Essay about solution slainas - 613 Words

I. Problem definition: Ms. Salinas Savings Loan has bucked the trend of financial and liquidity problems that has plagued the industry since 1985. Ms. Salinas believes it is necessary to have a long range strategic plan for her firm including a 1 year forecast and preferably even a 5 year forecast of deposits. Objective: 1.To determine what would be a successful forecasting tool for the strategic plan of Ms. Salinas. 2. To compare different forecasting tool with its Pros and Cons. II. Review of Background Information: In this case study, we should also focus the discussion on the 1980s concurrent crisis in the savings and loan (SL) industry even though it was stated that Salinas has bucked the trend of financial†¦show more content†¦Despite the liquidity problems experienced in 1980’s, it only took a little of the growth of the company by slowly increasing its deposit during this time frame. The data also showed an increasing trend both for the GSP of Kansas and the Deposit. a. Naive Approach: Answer: Year Deposit GSP 2003 108.9 million 5.3 billion b. Moving Average: For Ma =3 For Ma=5 c. Exponential smoothing: A=.3 A=.5 A=.7 d. Linear Trend analysis e. f. e. Linear regression: DEPOSIT = -17.64 + 13.596 (gsp) IV. Alternative courses of action to be taken: Naive Approach: Advantage: 1. Easy to do, and not time consuming. Disadvantage: 1. Too simple, not all factors are considered. 2. Only one value can be forecasted. Moving Average: Advantage: 1. Helps to clear out noise from the data and helps the observer make a clearer idea of any changes that are actually occurring in the long term. 2. Discounts the value of the oldest data. Disadvantage: 1. Can only forecast one value, limited only to the next data set. 2. Too large or too small value can greatly affect the result and also then sometimes significant long term changes in the data could be masked. Exponential Smoothing: Advantage: 1.