Question

If the trend equation to forecast demand Y (in Rs lakhs) for the required month (t) is Y = 100 + 20t - 5t2. What is the seasonally adjusted demand forecast for month 3 for which the corresponding seasonal index is 1.25?
1. 143.75
2. 115
3. 92
4. 123.25

Answer 1

Correct Answer - Option 1 : 143.75

Given

Seasonal index = 1.25

y = 100 + 20t - 5t²

Formula

Seasonal index = Seasonal adjusted demand/cast demand

Calculation

According to question

t = 3, putting t = 3 in equation we get,

⇒ y = 100 + 20 × 3 - 5 × (3)²

⇒ y = 115

⇒ SDeasonal adjusted index = seasonal index × forecast demand

⇒ 1.25 × 115

∴ The seasonally adjusted demand forecast for month 3 for which the corresponding seasonal index is 1.25 is 143.75