Question

Tucson Machinery, Inc., manufactures numerically controlled machines, which sell for an average price of $0.5 million each. Sales for these NCMs for the past two years were as follows: Use Exhibit 3.10.

LAST YEAR			THIS YEAR
QUARTER	QUANTITY (UNITS)		QUARTER	QUANTITY (UNITS)
I	11		I	14
II	18		II	23
III	25		III	27
IV	15		IV	21

a. Find the equation of a simple linear regression line using Excel. (Round your answers to 3 decimal places.)

Y =  +  t

b. Compute trend and seasonal factor from a linear regression line obtained with Excel. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

	Period	Trend Forecast	Seasonal Factors
Last Year	I
	II
	III
	IV
This Year	I
	II
	III
	IV

c. Forecast sales for next year using the above seasonal factors. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Period	Forecast (Units)
Next Year	I
	II
	III
	IV

Answer 1

(a and b)
t	Actual Quantity (Y)	Trend Forecast	Actual Quantity/Forecast	Seasonal Factors	Adjusted (Deseasonalized) Forecast
1	11	14.75	0.745762712	0.725	10.690
2	18	16.04	1.122495432	1.104	17.707
3	25	17.32	1.44330135	1.323	22.909
4	15	18.61	0.806143891	0.845	15.726
5	14	19.89	0.703772219	0.725	14.418
6	23	21.18	1.086007035	1.104	23.386
7	27	22.46	1.201912376	1.323	29.711
8	21	23.75	0.884214249	0.845	20.073
The regression line is Y = 13.464 + 1.286t

(c)
	Period	t	Forecast Quantity
	1	9	26.07
	2	10	27.57
	3	11	29.06
	4	12	30.56