Tommy has recently graduated from SUSS and has joined a well-known retailer that operates 3 department stores in Singapore. His job function is that of a business analyst. It has been well-reported that retail business in Singapore is on the decline and his employer would like to determine if the forecast for the next few years will be equally bad. Tommy has been tasked to perform the analysis and his output will provide insights in the company's hiring and expansion plan in Singapore.

The first thing Tommy did was to download the Retail Sales Index data from the Department of Statistics Singapore website. He specifically extracted the data for "Department Stores" from Q1 2008 to Q4 2018. (2017 is set as the base year with Index = 100). Refer to table:

Year/QuarterRetailSalesIndex(DepartmentStores)

20081Q 92.4

20082Q 93

20083Q 84.9

20084Q 105.3

20091Q 87.1

20092Q 88.6

20093Q 83.2

20094Q 103.6

20101Q 94.3

20102Q 93.9

20103Q 90.7

20104Q 109.3

20111Q 99.6

20112Q 99

20113Q 95.8

20114Q 119.3

20121Q 104.9

20122Q 99.9

20123Q 95

20124Q 117

20131Q 106.1

20132Q 100.9

20133Q 97.5

20134Q 118.6

20141Q 107.1

20142Q 98.7

20143Q 95.7

20144Q 117.6

20151Q 108.2

20152Q 101.1

20153Q 98.8

20154Q 114.4

20161Q 103.8

20162Q 93.9

20163Q 93.2

20164Q 112.9

20171Q 100.3

20172Q 93

20173Q 94.6

20174Q 112.1

20181Q 102.7

20182Q 92.3

20183Q 93.6

20184Q 112.8

1 (a)Use the techniques of time series modelling and with justifications, discuss the considerations on how Tommy would forecast the quarterly Retail Sales Indexin 2019 and 2020.

1(b) Determine the quarterly RSIforecast in 2019 and 2020. You are required to show the essential steps in deriving the forecast and comment on any limitations of your technique.