Problem 3:

Savings-Mart (a chain of discount department stores) sells patio and lawn furniture. Sales are seasonal, with higher sales during the spring and summer quarters and lower sales during the fall and winter quarters. The company developed the following quarterly sales forecasting model:

Yt ^ = 8.25 + 0.125t - 2.7 D1t + 0.25 D2t + 3.50 D3t

where Yt ^ = predicted sales ($ million) in quarter t

8.25 = quarterly sales ($ million) when t = 0

t = time period (quarter) where the fourth quarter of 2016 = 0, first quarter of 2017 = 1, second quarter of 2017 = 2, ...

1 for the first -quarter observations 0 other wise

D1t = 1 for the first-quarter observations

0 otherwise

D2t = 1 for the second observations

0 otherwise

D3t = 1 for the third-quarter observations

0 otherwise

Forecast savings-Mart's sales of patio and lawn furniture for each quarter of 2022.