The file P14_08.xlsx contains five years of monthly data on sales (number of units sold) for a particular company. The company suspects that except for random noise, its sales are growing by a constant percentage each month and will continue to do so for at least the near future.

a. Explain briefly whether the plot of the series visually supports the company’s suspicion.

b. By what percentage are sales increasing each month?

c. What is the MAPE for the forecast model in part b?

In words, what does it measure? Considering its magnitude, does the model seem to be doing a good job?

d. In words, how does the model make forecasts for future months? Specifically, given the forecast value for the last month in the data set, what simple arithmetic could you use to obtain forecasts for the next few months?

Skill-Extending Problems