Suppose Winters’ method is used to forecast quarterly U.S. retail sales (in billions of dollars). At the end of the first quarter of 2018, the seasonal indexes are: quarter 1, 0.94; quarter 2, 1.02; quarter 3, 1.0; quarter 4, 1.05. Also, the current estimates of level and trend are 1,168 and 7. During the second quarter of 2018, retail sales are $1,188 billion. Assume α = 0.2, β = 0.4, and ϒ = 0.5.

a. At the end of the second quarter of 2018, develop a forecast for retail sales during the third and fourth quarters of 2018.

b. At the end of the second quarter of 2018, develop a forecast for the first and second quarter of 2019.