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 2 using the data in the spreadsheet?
A) 208.5 ≤ 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 2 using the data in the spreadsheet?
A) 208.5 ≤ predicted sales < 209.5 
B) 233.5 ≤ predicted sales < 234.5 
C) 283.5 ≤ predicted sales < 284.5 
D) 300.5 ≤ predicted sales < 301.5

Quizplus · Accepted Answer

To use Holt's method, two initial values are needed: the level value and the trend value. For this data, the level value is 200 and the trend value is 20. The Holt's method formula for a new forecast is: 
Forecast = Level + Trend * Alpha
For time period 2, the actual sales value is 250. Using the given values of alpha and beta (0.2 each), the predicted sales for time period 2 can be calculated as follows:
Level 2 = 200 + 20 = 220
Trend 2 = 20 + 0.2 * (250 - 200) = 30
Forecast 2 = 220 + 30 * 0.2 = 226
Therefore, the predicted sales for time period 2 is between 283.5 and 284.5.

Exhibit 11.7 The Following Questions Use the Data Below