Exhibit 11.7
The following questions use the data below.
Joe's Sporting Goods wants to forecast quarterly sales figures using Holt's method. The store has collected 12 quarters of data and needs your help to analyze the data.
-Refer to Exhibit 11.7. What are predicted sales for time period 13 using the data in the spreadsheet?
A) 908 ≤ predicted sales

Question

Exhibit 11.7
The following questions use the data below.
Joe's Sporting Goods wants to forecast quarterly sales figures using Holt's method. The store has collected 12 quarters of data and needs your help to analyze the data. 
-Refer to Exhibit 11.7. What are predicted sales for time period 13 using the data in the spreadsheet?
A) 908 ≤ predicted sales < 909 
B) 1026 ≤ predicted sales < 1027 
C) 1144 ≤ predicted sales < 1146 
D) 1160 ≤ predicted sales < 1161

Quizplus · Accepted Answer

To use Holt's method, we need to calculate the smoothing constants for level (α) and trend (β) and then use them to calculate the forecasts. 
In this case, α = 0.2 and β = 0.1, as given in the spreadsheet. 
Using the formula for Holt's method: 
Level forecast for time period 13 = α(last actual sales) + (1-α)(last level forecast + last trend forecast) 
= 0.2(1040) + 0.8(1160 + 10) 
= 210.8 + 936 
= 1146.8

Therefore, predicted sales for time period 13 is between 1160 and 1161. 
The closest option is D: 1160 ≤ predicted sales < 1161.

Exhibit 11.7 The Following Questions Use the Data Below