Question
Costello Music Company has been selling electronic organs over the past 5 years. Sales were initially low but have grown over time. Ray Costello, the
Costello Music Company has been selling electronic organs over the past 5 years. Sales were initially low but have grown over time. Ray Costello, the owner of the company, wants to predict the sales for the upcoming year using the number of sales that Costello Music Company has experienced. The sales totals are given in the following table.
Year 1 2 3 4 5
Q1 4,6,10,12,18
Q2 2,4,3,9,10
Q3 1,4,5,7,13
Q4 5,14,16,22,35
a) Using linear trend predict sales for each of the four quarters for the next year?
b) Using seasonality with trend (multiplicative decomposition), what are the forecasted sales for each of the four quarters for next year?
c) Using MAD which of the which of the two methods above should be used to forecast sales for next year?
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