Question

ABC Company a Northwest manufacturer makes woman’s shoes, for which demand is highly seasonal. The company has experienced difficulty in making accurate forecasts. The following table gives the quantity of hose sold by quarters in the last three years.   

Demand Quarter 1998 1999 2000 I 540 590 649 II 70 72 82 III 110 126 130 IV 443 460 510

Decompose the data series into trend and seasonal factors and make forecasts for each quarter in 2001

Answer 1

Use the seasonal average method to conduct the decomposition as follows:

Result:

Year	Qtr	Period	Demand	Seasonal average	Seasoanal index	Deseasonalized demand	Trend	Adjusted forecast
1998	I	1	540	593.0	1.882	287.00	283.62	533.6
	II	2	70	74.7	0.237	295.47	289.35	68.6
	III	3	110	122.0	0.387	284.17	295.09	114.2
	IV	4	443	471.0	1.494	296.43	300.83	449.6
1999	I	5	590		1.882	313.57	306.56	576.8
	II	6	72	315.2	0.237	303.91	312.30	74.0
	III	7	126		0.387	325.50	318.03	123.1
	IV	8	460		1.494	307.81	323.77	483.9
2000	I	9	649		1.882	344.93	329.51	620.0
	II	10	82		0.237	346.12	335.24	79.4
	III	11	130		0.387	335.83	340.98	132.0
	IV	12	510		1.494	341.26	346.72	518.2
2001	I	13			1.882		352.45	663.2
	II	14			0.237		358.19	84.9
	III	15			0.387		363.93	140.9
	IV	16			1.494		369.66	552.4