Mayfair Department Store was shut down during the months of July and August due to severe flooding in the downtown area. The stores insurance policy provides revenues to the department store in cases of natural disasters. Sales data for the preceding 6 months are listed below.

Month	Sales (1,000s)	Month	Sales (1,000s)
January	184.72	April	210.36
February	167.84	May	255.57
March	205.11	June	261.19

1. Develop a forecast for July and August using exponential smoothing with a = 0.4. (Hint: use the July forecast as actual sales for July in developing the August forecast.) Comment on the use of exponential smoothing for forecasts more than one period in the future.

b) Use linear trend to predict sales for July and August. What are the forecasted amounts?

c) Mayfairs insurance company has offered $240,000 per month for the lost sales. Should Mayfair accept the settlement offer? Why? If Mayfair should reject the offer, what is the amount that Mayfair should make as a counter offer?