Trevor Harty, an avid mountain biker, always wanted to start a business
Question # 00588699
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Updated on: 09/14/2017 08:20 AM Due on: 09/14/2017
[5-33] Trevor Harty, an avid mountain biker, always wanted to start a business
selling top-of-the-line mountain bikes and other outdoor supplies. A little over 6
years ago, he and a silent partner opened a store called Hale and Harty Trail Bikes
and Supplies. Growth was rapid in the first 2 years, but since that time, growth in
sales has slowed a bit, as expected. The quarterly sales (in $1,000s) for the past 4
years are shown in the table below:
Year
Year 2 Year 3
Year 4
1
Quarter
274
282
282
296
1
Quarter
172
178
182
210
2
Quarter
130
136
134
158
3
Quarter
162
168
170
182
4
(a) Develop a trend line using the data in the table. Use this to forecast sales for
each quarter of year 5. What does the slope of this line indicate?
(b) Use the multiplicative decomposition model to incorporate both trend and
seasonal components into the forecast. What does the slope of this line indicate?
(c) Compare the slope of the trend line in part a to the slope in the trend line for the
decomposition model that was based on the deseasonalized sales figures. Discuss why these are so different.
selling top-of-the-line mountain bikes and other outdoor supplies. A little over 6
years ago, he and a silent partner opened a store called Hale and Harty Trail Bikes
and Supplies. Growth was rapid in the first 2 years, but since that time, growth in
sales has slowed a bit, as expected. The quarterly sales (in $1,000s) for the past 4
years are shown in the table below:
Year
Year 2 Year 3
Year 4
1
Quarter
274
282
282
296
1
Quarter
172
178
182
210
2
Quarter
130
136
134
158
3
Quarter
162
168
170
182
4
(a) Develop a trend line using the data in the table. Use this to forecast sales for
each quarter of year 5. What does the slope of this line indicate?
(b) Use the multiplicative decomposition model to incorporate both trend and
seasonal components into the forecast. What does the slope of this line indicate?
(c) Compare the slope of the trend line in part a to the slope in the trend line for the
decomposition model that was based on the deseasonalized sales figures. Discuss why these are so different.
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Rating:
/5
Solution: Trevor Harty, an avid mountain biker, always wanted to start a business