Predicting Future Demand for Microwave Ovens?

Question

The Highland Company is a retailer that sells microwave ovens. The company wants
to model its demand for microwaves over the next 12 years. Using historical data as
a guide, it assumes that demand in year 1 is normally distributed with mean 5000 and
standard deviation 1500. It assumes that demand in every subsequent year is
normally distributed with mean equal to the actual demand from the previous year
and standard deviation 1500.
Construct and analyze a spreadsheet model for microwave oven demand over the
next 12 years. Investigate the ramifications of this model, and suggest models that
might be more realistic.

Answer 1

Offhand I would say that the model predicts demand in year N to be normally distributed with mean 5000 and standard deviation 1500 sqrt(N). The model prediction of the probability of negative sales in year N increases towards 0.5 from below as N approaches positive infinity. :-)