Question $3(25$ points$)$

Consider the demand for rock salt used primarily to melt snow. This salt is produced by

a firm called Tahoe Salt, which sells its salt through a variety of independent retailers

around the Lake Tahoe area of the Sierra Nevada Mountains. In the past, Tahoe Salt has

relied on estimates of demand from a sample of its retailers, but the company has noticed

that these retailers always overestimate their purchases, leaving Tahoe $($and even some

retailers$)$ stuck with excess inventory. After meeting with its retailers, Tahoe has decided

to produce a collaborative forecast. Tahoe Salt wants to work with the retailers to create

a more accurate forecast based on the actual retail sales of their salt. The sales records

for the salt in the past year $(12$ months$)$ has been collected in the table in the next page.

The manager wants to use the Holt$$s model with Alpha$=0\mathrm{.}1$ and Beta$=0\mathrm{.}1$ for

forecasting the sales in the future. Answer the following questions. $($Only Excel files are

accepted for this question$)$

a$)$ Calculated the initial values for level and trend $($T$0=?$ And L$0=?)(4$ Points$)$

b$)$ Forecast the demand for periods $1$ to $12.(10$ Points$)$

c$)$ Calculate the TS$\_$t factor for periods $1$ to $12$ and determine whether the Holt$$s

method is acceptable for this data set or not. $(10$ Points$)$

d$)$ What is the expected sale for period $15($F$15=?)?(1$ Point$)$

$3$

Period $($t$)$ Demand $($Dt$)$

$18,000$

$213,000$

$323,000$

$434,000$

$510,000$

$618,000$

$723,000$

$838,000$

$912,000$

$1013,000$

$1132,000$

$1241,000$