Hudson Paper Company is a small family-owned business that purchases paper in rolls from large mills. It then cuts and prints the paper into a variety of products, such as bags and wrapping paper, to customer order. The seasonality of sales has made forecasting a particularly difficult problem, especially because of the exact timing of seasonal surges. Management would like to develop an exponential smoothing forecasting model that will aid in forecasting sales. The model should be one that minimizes forecast error.
a. Based on the following aggregate product sales data that have been collected over the last five years, what forecasting model type and smoothing constant values would you suggest?

b. What is your forecast for January 2004?
c. Construct a 95-percent confidence band on the forecast in part (b).

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SALES. ROLLS 2000 7,000 10,000 10,000 8,000 Month 2003 7,000 8,000 8,000 2002 1999 1998 10,000 10,000 7,000 9,000 8,000 7,000 7,000 ,000 10,000 11,000 June 00 13,000 12,000 11,000 1,000 5,000 13,000 19,000 15,000 Sept. 1,000 17,000 20,000 21,000 25,00 20,000 21,000 25,000 8,000 9,000 8,000 ,000 0,000 9,000 10,000 an. Feb. Mar. Apr May 12,000 15,000 July 9,000 13,000 11,000 Aug. Oct. Nov Dec. 11,000 17,000 13,000 17,000 9,000 21,000 23,000 25,00 27000 13,000 15,000 7,000 13,000 174,000 172,000 Total 137000 150,000 500 1