Zeus Computer Chips, Inc. used to have major contracts to produce the Centrino-type chips. The market has been declining during the past three years because of the quad-core chips, which it cannot produce, so Zeus has the unpleasant task of forecasting next year. The task is unpleasant because the firm has not been able to find replacement chips for its product lines. Here is the demand over the past 12 quarters:

Two Years Ago Last Year This Year I

II III IV 4,800 3,500 4,300 3,000 I

II III IV 3,500 2,700 3,500 2,400 I

II III IV 3,200 2,100 2,700 1,700 Use regression and seasonal indexes to forecast the demand for the next four quarters.

TW-111