Question 1- 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 dual-care 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 demand over the past 12 quarters:
| Two Years Ago |
Units |
Last Year |
Units |
This Year |
Units |
| I |
4,810 |
I |
3,510 |
I |
3,160 |
| II |
3,510 |
II |
2,710 |
II |
2,110 |
| III |
4,310 |
III |
3,510 |
III |
2,685 |
| IV |
3,010 |
IV |
2,410 |
IV |
1,665 |
Use the decomposition technique to forecast demand for the next four quarters.
Question 2- Demand for stereo headphones and MP3 players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for last year was as follows:
| Months |
Demand (Units) |
| January |
4,220 |
| February |
4,320 |
| March |
4,020 |
| April |
4,420 |
| May |
5,020 |
| June |
4,120 |
| July |
5,320 |
| August |
4,920 |
| September |
5,420 |
| October |
5,720 |
| November |
6,320 |
| December |
6,020 |
a. Using linear regression analysis, what would you estimate demand to be for each month next year?
b. To be reasonably confident of meeting demand. Hine decides to use 3 standard errors of estimate for safety. How many additional units should be held to meet this level of confidence?