Winter’s method assumes a multiplicative seasonalitybut an additive trend. For example, a trend of 5 means thatthe base will increase by 5 units per period. Suppose thereis actually a multiplicative...

Winter’s method assumes a multiplicative seasonalitybut an additive trend. For example, a trend of 5 means thatthe base will increase by 5 units per period. Suppose thereis actually a multiplicative trend. Then (ignoring seasonality)if the current estimate of the base is 50 and the currentestimate of the trend is 1.2, we would predict demand toincrease by 20% per period. Ignoring seasonality, we wouldthus forecast the next period’s demand to be 50(1.2) andforecast the demand two periods in the future to be 50(1.2)²

Extracted text: If we want to use a multiplicative trend in Winter's method, we should use the following equations: L, = a * ) + (1 – a) * (!) T, = B * (II) + (1 – B) * T,-1 %3D ) + (1 – – y)* $r-12 a Determine what I and II should be. b Suppose we are working with monthly data and month 12 is a December, month 13 a January, and so on. Also suppose that L12 = 100, T12 = 1.2, s = 0.90, s2 = 0.70, and s3 = 0.95. Suppose x13 = 200. At the end of month 13, what is the prediction for x15? Assume a = B = y = 0.5.