Question: Consider the following set of inventory data in thousands of dollars(000) for the 4 quarters in years 1997 to 2000:

1997 1998 1999 2000

1Q 209 218 215 230

2Q 195 203 210 227

3Q 215 226 220 238

4Q 208 220 216 235

a. Plot the data on a time scale, using first quarter of 1997=1, 2^nd quarter of 1997=2, etc. Based on your visual observations, what time series components are present? (2 points)

b. Determine the seasonal index for each quarter ( 1Q, 2Q, 3Q, 4Q). (2 points)

c. Convert the data to deseasonalized data and show the values for each quarter. (2 points)

d. Determine the trend line (write down the equation) for the deseasonalized data and plot it along with the deseasonalized data for years 1997 through 2000. Determine the MAD and MSE values for the trend data. (2 points).

e. Forecast the deseasonalized data for the year 2001 using the model from part d and provide seasonal adjusted forecasts for each quarter of 2001 (Hint: Use the seasonal indexes you calculated in b). (2 points)