Question

The monthly linear trend equation for the Hoopes ABC Beverage Store is:

ŷ = 5.50 + 1.25t

The equation is based on 4 years of monthly data and is reported in thousands of dollars. The index for January is 105.0 and for February it is 98.3. Determine the seasonally adjusted forecast for January and February of the fifth year.

Answer 1

The monthly linear trend equation for the Hoopes ABC Beverage Store is,

ŷ = 5.50 + 1.25(t)

 

Calculate the seasonally adjusted forecast for January of the fifth year.

 

Adjusted Seasonal January = 1.05{5.50 + 1.25(50 – 1)}

                                                = 1.05{5.50 + 1.25(49)}

                                               = 70.0875

 

Hence, the seasonally adjusted forecast for January is: 70.875.

 

Calculate the seasonally adjusted forecast for February of the fifth year.

Adjusted Seasonal February = 0.983{5.50 + 1.25(50)}

                                                   = 66.844

 

Hence, the seasonally adjusted forecast for February is: 66.844.

Hence, the seasonally adjusted forecast for January is: 70.875.

Hence, the seasonally adjusted forecast for February is: 66.844.