Chapter 03 Homework Question 3 (of 4) 3 100points Problem 3-11 A manager of a st

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Chapter 03 Homework Question 3 (of 4) 3 100points Problem 3-11 A manager of a store that sells and installs spas wants to prepare a forecast for January, February, and March of next year. Her forecasts are a combination of trend and seasonality. She uses the following equation to estimate the trend component of monthly demand: Fr 50+6, where0 in June of last year Seasonal relatives are 1.02 for January, 89 for February, and .99 for March. What demands should she predict? (Round your answers to 2 decimal places.) Month January of the next year February of the next year March of the next year Forecast References eBook&Resources Worksheet Difmiculty: 2 Medium Lean Problem 3-11 Learning Objective: 03-11 Prepare a linear trend forecast Check my work

Explanation / Answer

Seasonal relative for January = 1.02

Seasonal relative for February = 0.89

Seasonal relative for March = 0.99

Trend component of monthly demand is given by the equation below.

Ft = 50 + 6t

where t = 0 in June of last year

Thus, the value of t for January, February, and March of next year will be equal to 19, 20 and 21 respectively.

Forecast for January of next year using trend component + 6 * 19 = 164 spas

Forecast for February of next year using trend component + 6 * 20 = 170 spas

Forecast for March of next year using trend component + 6 * 21 = 176 spas

Now, finding the forecast using both trend and seasonal component

Forecast for January of next year = 164 * Seasonal relative

= 164 * 1.02 = 167.28 spas

Forecast for February of next year = 170 * Seasonal relative

= 170 * 0.89 = 151.3 spas

Forecast for March of next year = 176 * Seasonal relative

= 176 * 0.99 = 174.24 spas

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