Chapter 17, Problem 50SE

Refer to the Costello Music Company problem in exercise 49.

1. a. Using time series decomposition, compute the seasonal indexes for the four quarters.
2. b. When does Costello Music experience the largest seasonal effect? Does this result appear reasonable? Explain.

49. Consider the Costello Music Company problem in exercise 48. The quarterly sales data follow.

Year	Quarter I	Quarter 2	Quarter 3	Quarter 4	Total Yearly Sales
1	4	2	1	5	12
2	6	4	4	14	28
3	10	3	5	16	34
4	12	9	7	22	50
5	18	10	13	35	76

1. a. Use the following dummy variables to develop an estimated regression equation to account for any seasonal and linear trend effects in the data: Qtr1 = 1 if Quarter 1, 0 otherwise; Qtr2 = 1 if Quarter 2, 0 otherwise; and Qtr3 = 1 if Quarter 3, 0 otherwise.
2. b. Compute the quarterly forecasts for next year.