Problem #4.27 -- after computing the seasonal indices find a forecast for the fo

Question

Problem #4.27 -- after computing the seasonal indices find a forecast for the four quarters of year 5 assuming the average annual demand for year 5 will increase by 5% compared to that of year 4.

-4.27George Kyparisis owns a company that manufactures sailboats. Actual demand for George's sailboats during each of the past four seasons was as follows YEAR SEASON Winter 1,400 1,200 1,000 900 Spring500 1,400 1,600 ,500 Summer,000 2,100 2,000 900 Fall 600 750 650 500 George has forecasted that annual demand for his sailboats in year 5 will equal 5,600 sailboats. Based on this data and the multiplicative scasonal model, what will the demand level be for George's sailboats in the spring of year 5?

Explanation / Answer

1. Calculate average demand per season

2. Divide the actual demand of each season by average demand per season (Seasonal Index)

Step 3: Calculate Average Seasonal Index for each season:

Step 4: Calculate each season forecast for Year 5, given that total sales in Year 5 is 5600:

Average for each season in Year 5 = 5600/4= 1400

This is the demand for each season without seasonality

Demand with seasonality = average * Seasonal index

Hence demand comes out to be

Situation2

When average annual demand exceeds by 5%

Average annual demand = 1200*1.05= 1260

Hope you liked the solution.

1 2 3 4 W 1400 1200 1000 900 S 1500 1400 1600 1500 Sum 1000 2100 2000 1900 F 600 750 650 500 sum 4500 5450 5250 4800 average 1125 1362.5 1312.5 1200

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