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In a time series analysis, the multiplicative model is used to forecast sales and the following
seasonal variations apply:Quarter 1 2 3 4
Seasonal variation 1.3 1.4 0.5 ?What is the seasonal variation for the fourth quarter (to one decimal place)?
Can you please explain me why they deducted the SV of the first 2 quarters then multiply the SV of Quarter 3? I know it is the multiplicative model but I am confused about the logic of this.
Let x = seasonal variation in quarter 4.
1.3 + 1.4 + 0.5 + x = 4
Therefore x = 4 – 1.3 – 1.4 x 0.5 = 0.8Thank you.
Have you checked the arithmetic? Because what you have typed does not equal 0.8 at all – either you have copied the answer wrongly or your book has a typing error in it. Which Revision Kit are you using? (BPP or Kaplan).
The seasonal variations must add up to 4 in total. The first three add up to 1.3 + 1.4 + 0.5 = 3.2
Therefore the seasonal variation in quarter 4 must be 4 – 3.2 = 0.8.
Yes, I did. The answer is like that so I believe there is a typing error in it. I am using BPP Revision Kit.
Thank you, I have understood it now.
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