Carmelo’s Gelati

Carmelo sells gelati and other refreshments from a small shop in his suburb.
Sales of gelati are traditionally seasonal, with sales expected to be higher in warmer weather.
Carmelo has noted the number of gelati sold per quarter over a three-year period as follows.

Quarter 1 Quarter 2 Quarter 3 Quarter 4

2003 502 343 293 422
2004 487 314 254 465
2005 565 384 300 435

1. Complete the table below, which shows the quarterly average for each year.

Year Quarterly
Average
2003 390
2004
2005

2. Complete the table below by finding the seasonal indices, correct to 3 decimal places, for each of
the quarters.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
2003 1.287
2004 1.282
2005 1.342

3. Complete the following table by finding the average seasonal index, correct to 2 decimal places,
for each quarter.
Seasonal
Index
Quarter 1 1.30
Quarter 2
Quarter 3
Quarter 4

4. Give an interpretation of the seasonal index for Quarter 1.

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5. Using the seasonal indices found in Question 3, complete the following deseasonalised sales
figures. Give your answers correct to the nearest whole number.

Quarter 1 Quarter 2 Quarter 3 Quarter 4

2003 386 394 380
2004 375 358 419
2005 441 423
6. Using Quarter 1 2003 as time period 1, Quarter 2 2003 as time period 2 etc, determine a least
squares regression equation of the form:

Deseasonalised Sales = a + b × time period

Express a and b correct to two decimal places.

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7. Use the equation you fund in question 6 to predict the deseasonalised sales figures for
Quarter 2 2005. Give your answer correct to the nearest whole number.
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8. Hence calculate the residual value of deseasonalised sales for Quarter 2 2005
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9. Use the equation found in question 6, together with the seasonal indices, to forecast the sales for
Quarter 4 2006. Give your answer correct to the nearest whole number.
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10. Is the forecast found in question 9 an example of interpolation or extrapolation?

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