George Kyparisis owns a company that manufactures sailboats. Actual demand for G

Question

George 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 Spring Summer Fall 1,440 1,520 1,020 640 2 1,200 1,400 2,120 810 3 1,000 1,620 2,040 670 4 900 1,540 1,900 520 George has forecasted that annual demand for his sailboats in year 5 will equal 5,600 sailboats Based on the given data and using the multiplicative seasonal model, the demand level for George's sailboats in the spring of year 5 will be sailboats (enter a whole number)

Explanation / Answer

Here we have to first calculate the average quarterly demand for each year which is Sum of the demand for each season /4

So the average quarterly demand for each year are

Then we have to calculate the seasonal factor for spring for each year as: demand for spring that year / Average quarterly demand for the year. So the seasonal factor for spring are :

Average seasonal factor for spring = Sum of the seasonal factor for spring for all the years / number of years

= (1.32+1.01+1.22+1.27) / 4

= 4.82/4

= 1.205

Total demand for year 5 = 5600 sailboats

Average quarterly demand for year 5 = 5600/4 = 1400

Forecast for spring of year 5 = Average quarterly demand for year 5 x Average seasonal factor for spring

= 1400 x 1.205

= 1687 sailboats

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