The Northwoods Outdoor Company is a catalog sales operation that specializes in outdoor recreational clothing. Demand for its items is very seasonal, peaking during the Christmas season and during the spring. It has accumulated the following data for orders per season (quarter) during the past 5 years: Orders (1,000s)/Year
Quarter 1 2 3 4 5
January–March 18.6 18.1 22.4 23.2 24.5
April–June 23.5 24.7 28.8 27.6 31.0
July–September 20.4 19.5 21.0 24.4 23.7
October–December 41.9 46.3 45.5 47.1 52.8
a. Develop a seasonally adjusted forecast model for these order data. Forecast demand for each quarter for year 6 (using a linear trend line forecast estimate for orders in year 6).
b. Develop a separate linear trend line forecast for each of the four seasons and forecast each season for year 6.
c. Which of the two approaches used in (a) and (b) appears to be the more accurate? Use MAD to verify your selection.