CEO John Goodale, at Southern Illinois Power and Light, has been collecting data on demand for electric power in its western subregion for only the past 2 years. Those data are shown in the table below. To plan for expansion and to arrange to borrow power from neighboring utilities during peak periods, Goodale needs to be able to forecast demand for each month next year. However, the standard forecasting models discussed in this chapter will not fit the data observed for the 2 years.

a) What are the weaknesses of the standard forecasting tech-niques as applied to this set of data?

b) Because known models are not appropriate here, propose your own approach to forecasting. Although there is no perfect solution to tackling data such as these ( in other words, there are no 100% right or wrong answers), justify your model.

c) Forecast demand for each month next year using the model youpropose.

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DEMAND IN MEGAWATTS MONTH January February March April LAST YEAR THIS YEAR 14 20 23 30 38 June Juh August September October November December 13 18 15 23 26 21 15 12 14 26 17