A major source of revenue in Texas is a state sales tax on c

A major source of revenue in Texas is a state sales tax on certain types of goods and services. Data are compiled and the state comptroller uses them to project future revenues for the state budget. One particular category of goods is classified as Retail Trade. Four years of quarterly data (in $millions) for one particular area of southeast Texas follow:

Quarter    Year 1       Year 2      Year 3       Year 4

1          218           225           234            250

2          244           254           265            283

3          243           255           264            289

4          298           301           334            362

1. Compute seasonal indices for each quarter based on a CMA.

2. Deseasonalize the data and develop a trend line on the deseasonalized data.

3. Use the trend line to forecast the sales for each quarter of year 5.

4. Use the seasonal indices to adjust the forecasts found in part (c) to obtain the final forecasts.

Solution

Sol)

FOllowing are the MA and CMA

b)