Question

Problem 5 Using the quarterly unit sales data for 2020 calculate the quarterly sales forecast using the seasonal index approach for 2021 if annual demand for 2021 is expected to be 400 units. 2020 Q1 30 Q2 110 Q3 10 Q4 80 The expected sales in Quarter 2 of 2021 is:

Answer 1

The quarterly sales forecast for 2021, using the seasonal index approach:

Estimated 2021 Sales

Q1 52

Q2 191

Q3 17

Q4 140

Total 400

Step-by-step explanation:

a) Data and Calculations:

Annual demand for 2020:

2020 Sales Estimated 2021 Sales

Q1 30 52 (30/230 * 400)

Q2 110 191 (110/230 * 400)

Q3 10 17 (10/230 * 400)

Q4 80 140 (80/230 * 400)

Total 230 400

b) The seasonal index approach uses an average to compare an actual observation relative to an estimated observation based on the removal of annual seasonal variations.