Question

In: Operations Management

The sales volume for the last 7 years is given below by quarter in the following...

The sales volume for the last 7 years is given below by quarter in the following table:

Year	Sales by Quarter
Year	Q1	Q2	Q3	Q4
2013	289	410	301	213
2014	212	371	374	333
2015	293	441	411	363
2016	324	462	379	301
2017	347	520	540	521
2018	381	594	573	504
2019	444	592	571	507

Determine the values for the typical seasonal indexes and use them to obtain an estimate of demand for each quarter in 2020? Show all of your work.

Expert Solution

Total average quarterly demand = 327.143 + 484.286 + 449.857 + 391.714 = 1653

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After computing the seasonal index, we have to estimate the trend equation using linear regression analysis.

The linear trend equation is given as

y = a + b x

where y = demand to be forecasted

a = intercept

b = slope

x = independent variable

The trend equation is

y = 247.29 + 41.49 x

Using the above equation, the average demand for all seasons in year 2020 is calculated

y = 247.29 + 41.49 8 = 579.21

The above forecast is multiplied by the corresponsing quarterly seasonal indexes to obtain the forecasted estimates for each quarter of 2020.

Forecast for quarter 1 of 2020 = 579.21 0.7916 = 458.5

Forecast for quarter 2 of 2020 = 579.21 1.1719 = 678.8

Forecast for quarter 3 of 2020 = 579.21 1.0886 = 630.5

Forecast for quarter 4 of 2020 = 579.21 0.9479 = 549

The equation can be obtained using regression analysis in excel with average demand of all seasons as dependent variable. In excel go to data, data analysis and choose regression and select the variables as shown.

keosha answered 1 year ago

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