Question: Consider the following set of sales data given in millions of dollars.

1997 1999

1st quarter 152 1st quarter 217

2nd quarter 162 2nd quarter 209

3rd quarter 157 3rd quarter 202

4th quarter 167 4th quarter 221

1998 2000

1st quarter 182 1st quarter 236

2nd quarter 192 2nd quarter 242

3rd quarter 191 3rd quarter 231

4th quarter 197 4th quarter 224

a. Plot these data. Based on your visual observations, what time-series components are present in the data?

b. Determine the seasonal index for each quarter.

c. Fit a linear trend model to the deseasonalized data for 1997 through 2000 and determine the MAD and

MSE values. Comment on the adequacy of the linear trend model based on these measures of forecast

error.

d. Provide a seasonally unadjusted forecast using the linear trend model for each quarter of 2001.

e. Use the seasonal index values computed in part b to provide seasonal adjusted forecasts for each quarter

of 2001.