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Below is the question when I doing the practise test and hope you can help me.
A company uses a multiplicative time series model to forecast sales. The trend in sales is linear and is described by the following equation:
Trend= 400+10T
Where T=1 denotes the first quarter of 20X0
T=2 denotes the second quarter of 20X0 etcThe average seasonal variations are as follows:
Quarter 1 2 3 4
% variation -30 +40 +10 -20What is the sales forecast for Quarter 3 of 20X1?
A. 480 units
B. 517 units
C. 423 units
D. 3157 unitsQ3 of 20X1 is T7
so trend is 400+(10×7)=470
The season variation for Q3 is +10 so the answer is 470+10=480 Athomps91: Please don’t answer in this forum – it is Ask the Tutor and you are not the tutor 🙂
Koey: thomps91’s answer is correct (although there is something very wrong with this question (unless you have copied it wrong)). The seasonal variations cannot possibly be %ages, and it cannot possibly be using the multiplicative model. This question can only possibly be the additive model.
John, I missed the title of the forum. it was a genuine error rather than an attempt to steal your thunder 🙂
Having apologised I’m relieved to discover that I was correct.
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