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Bell Greenhouses estimated its monthly demand for potting soil to be the following:
Where N=monthly demand for bags of potting soil
X= time periods in months (March 2004=0)
Assume this trend factor is expected to remain stable in the foreseeable future. The following table contains the monthly seasonal adjustments factors, which have been estimated using actual sales data from the past five years:
Month Adjustment Factor
A. Forecast Bell Greenhouses demand for potting soil in March, June, August, and December 2005.
B. If the following table shows the forecasted and actual potting soil sales by Bell Greenhouses for April in five different years, determine the seasonal adjustment factor to be used in making an April 2006 forecast
Year Forecast Actual
2005 500 515
2004 452 438
2003 404 420
2002 356 380
2001 308 320
This answer is given below.
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