The trend forecast equation is = 50 + 420t. The next forecast is for period 10. The typical seasonal index for period 10 is 1.25. What are the forecast sales for period 10?
A)4,200
B)4,250
C)5,313
D)1,075

Question

The trend forecast equation is  = 50 + 420t. The next forecast is for period 10. The typical seasonal index for period 10 is 1.25. What are the forecast sales for period 10?
A)4,200 
B)4,250 
C)5,313 
D)1,075

Quizplus · Accepted Answer

We can use the following formula:
Forecast sales for period 10 = Trend forecast equation * Seasonal index for period 10
= (50 + 420t)*1.25
where t = 10-1 = 9 (since we start counting periods from 1)
= (50 + 420*9)*1.25
= 5,313. Therefore, the forecast sales for period 10 is 5,313.

The Trend Forecast Equation Is = 50 + 420t