The SureGrip Tire Company produces tires of various sizes and shapes. The demand for tires tends to follow a quarterly seasonal pattern with a trend. For a particular type of tire the company’s current estimates are as follows: A0 = 10,000, T0 = 1,000, R0 = .8, R-1 = 1.2, R-2 = 1.5, and R-3 = .75.
a. The company has just observed the first quarter of demand D1 = 6000 and would like to update its forecast for each of the next four quarters using α = β = γ = .4.
b. When demand is observed for the second quarter, D2 = 15,000. How much error was there in the forecast?
c. Update the forecasts again for the coming year, using the second-quarter demand data.