Question: Management of the ABC Floral Shop believes that its sales are seasonal in nature with a monthly seasonal pattern and no trend. The demand data and seasonal ratios for the past three years are given as follows.

a. Calculate a forecast for Year 3 using A0 = 15,000, α = γ = .3, and the seasonal ratios shown above. For each period, calculate the forecast and the updated seasonal ratio.

b. Plot the original data and the forecast on a graph.

c. Calculate the tracking signals for the past year using MAD0 = 0. Are they within tolerances?

d. Using the classical decomposition method described in the chapter supplement, calculate the seasonal ratios from the data and determine the trend and average levels. Use these ratios and estimates of trend and level to make a forecast for the next year.