Savings-Mart (a chain of discount department stores) sells patio and lawn furnit

Question

Savings-Mart (a chain of discount department stores) sells patio and lawn furniture. Sales are seasonal, with higher sales during the spring and summer quarters and lower sales during the fall and winter quarters. The company developed the following quarterly sales forecasting model: Yt= 8.25 + 0.125t 2.75D1t + 2.25D2t + 3.50D3t Where Yt = predicted sales ($ million) in quarter t 8.25 = quarterly sales ($ million) when t = 0 t = time period (quarter) where the fourth quarter of 2002 = 0 First quarter of 2003 = 1, second quarter of 2003 = 2,. . . D1t = 1 for first-quarter observations 0 otherwise D2t = 1 for second quarter observations 0 otherwise D3t = 1 for third-quarter observations 0 otherwise a). Forecast Savings-Mart's sales of patio and lawn furniture for each quarter of 2010.

Explanation / Answer

1st Quarter2010(2010.1)

Yt =8.25 + 0.125t - 2.75D1t+ 0.25D2t+ 3.5D3t

Yt =8.25 + 0.125(29) - 2.75(1) + 0 + 0

Yt =9.125

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2nd Quarter 2010 (2010.2)

Yt =8.25 + 0.125t - 2.75D1t+ 0.25D2t+ 3.5D3t

Yt =8.25 + 0.125(30) - 0 + 0.25(1) + 0

Yt =12.25

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3rd Quarter 2010 (2010.1)

Yt =8.25 + 0.125t - 2.75D1t+ 0.25D2t+ 3.5D3t

Yt =8.25 + 0.125(31) - 0 + 0 + 3.5(1)

Yt =15.625

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1st Quarter 2010 (2010.1)

Yt =8.25 + 0.125t - 2.75D1t+ 0.25D2t+ 3.5D3t

Yt =8.25 + 0.125(32) - 0 + 0 + 0Y

t =12.25

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