Question

The Textron company in Mt. Vernon, Texas, asked you to develop quarterly forecasts of combine sales for next year. Combine sales are seasonal, and the data on the quarterly sales for the last four years are as follows: QUARTER YEAR 1 YEAR 2 YEAR 3 YEAR 4 1 55 85 178 256 2 37 23 101 193 3 89 130 145 209 4 110 156 167 167 Lisa Williams estimates the total demand for the next year at Textron. Use the seasonally adjusted exponential smoothing model to develop the forecast for each quarter. Use the appropriate assumptions to initialize the model.

Answer 1

Textron company
Quarter	Year 1	Year 2	Year 3	Year 4		exponential smoothing model
1	55	85	178	256		Assuming, Smoothing Parameter, ? = 0.6
2	37	23	101	193		F(t+1)=?Dt+(1-?)Ft
3	89	130	145	209		F(1) = D(1)
4	110	156	167	167
Year	Quarter	Demand	Qtr Average	Seasonal Index	Forecast	Seasonally adjusted forecast
1	1	55	143.50	1.09	55.00	60.10
	2	37	88.50	0.67	55.00	37.07
	3	89	143.25	1.09	44.20	48.22
	4	110	150.00	1.14	71.08	81.20
2	1	85			94.43	103.20
	2	23			88.77	59.83
	3	130			49.31	53.79
	4	156			97.72	111.63
3	1	178			132.69	145.00
	2	101			159.88	107.75
	3	145			124.55	135.87
	4	167			136.82	156.29
4	1	256			154.93	169.31
	2	193			215.57	145.29
	3	209			202.03	220.39
	4	167			206.21	235.56
	total average	131.31			182.68
5	1				215.57	235.58
	2				202.03	136.16
	3				206.21	224.96
	4				182.68	208.68

Formulae used: