The Questor Corporation has experienced the following sales pattern over a 10-year period: YEAR SALES ($000) 1997

Question:

The Questor has experienced the following sales pattern over a 10-year period:
YEAR SALES ($000)
1997 .......... 121
1998 .......... 130
1999 .......... 145
2000 .......... 160
2001 .......... 155
2002 .......... 179
2003 .......... 215
2004 .......... 208
2005 .......... 235
2006 .......... 262
2007 .......... *
*Unknown to be forecast.
a. Compute the equation of a trend line for these sales data to forecast sales for the next year. (Let 1997 = 0, 1998 = 1, etc., for the time variable) What does this equation forecast for sales in the year 2007?
b. Use a first-order exponential smoothing model with a w of 0.9 to forecast sales for the year 2007.

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