The trend forecast equation is = 100 + 120t. The next forecast is for period 11. The typical seasonal index for period 11 is 1.25. What are the forecast sales for period 11?
A)1,420
B)1,775
C)1,320
D)1,075

Question

The trend forecast equation is  = 100 + 120t. The next forecast is for period 11. The typical seasonal index for period 11 is 1.25. What are the forecast sales for period 11?
A)1,420 
B)1,775 
C)1,320 
D)1,075

Quizplus · Accepted Answer

We can use the following formula to calculate the forecasted sales for period 11:

Forecast for period 11 = Trend forecast equation x Seasonal Index for period 11

= (100 + 120t) x 1.25

Since we are forecasting for period 11, t would be equal to 10 (assuming the first period is period 1). Thus:

Forecast for period 11 = (100 + 120(10)) x 1.25

= 1,775

Therefore, the best choice is B, with a forecasted sales value of 1,775.

The Trend Forecast Equation Is = 100 + 120t