Today’s Guest Post comes from Prof. Howard Weiss, the developer of the Excel OM and POM software that comes free with our text.
Forecasting: For the past 40 years, cigarette smoking has been declining at a rate of 3% to 4%. The
drop can be seen in the figure below and it clearly is following an almost straight line, which makes
forecasting very easy using the trend projection method discussed in Chapter 4.
Some of the more recent decline can be attributed to the introduction of e-cigarettes and vapes. However, smoking is on the rise again during this current pandemic which means that time-series forecasting methods, which rely on past data, would not be very useful for forecasting sales of cigarettes in the foreseeable future.
Product Life Cycle: Below is a figure that displays sales of cigarettes from 1900 to 2015 for 8 different countries on 3 different continents.
What is interesting about the figure is that while smoking started and peaked at different years, for all of
these countries, the pattern is identical for each country to Figure 2.5 in the text, which displays the 4 phases of the life cycle – Introduction, Growth, Maturity, and Decline. It is also interesting to note that the life cycle for cigarettes has been over 100 years.
Classroom Discussion Questions:
- Cite another product or service with a life cycle as long as a century.
- Do you think you can trust all of the data in the figure?