Question

A manager uses a trend equation plus quarterly relatives to predict demand. Quarter relatives are SR1 = 0.9, SR2 = 0.95, SR3 = 1.05, and SR4 = 1.1. The trend equation is: Ft = 6 + 4t. Over the past nine quarters, demand has been as follows:

Period, t: 1 2 3 4 5 6 7 8 9
Demand: 12 14 18 20 24 30 35 37 43

Answer 1

The question asks for predicting demand using a trend equation and seasonal relatives. the calculation involves using the trend equation Ft = 6 + 4t and then adjusting the result by the appropriate seasonal relative for the quarter in question.

Step-by-step explanation:

The subject question involves a manager using a trend equation and quarterly relatives to predict demand. The trend equation provided is Ft = 6 + 4t, and the quarter relatives given are SR1 = 0.9, SR2 = 0.95, SR3 = 1.05, and SR4 = 1.1. To forecast demand using these tools, one multiplies the forecast from the trend equation for a particular time period (t) by the corresponding seasonal relative for that quarter.

For example, if you were to predict the demand for quarter 10, you would first calculate the trend equation value and then adjust it by the seasonal relative for the respective quarter. in this case, the trend calculation would be 6 + 4(10) = 46. If quarter 10 falls in a quarter with SR1 (0.9), the final prediction for the demand would be 46 x 0.9 = 41.4.