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In seasonal variation how do we forecast the next years sales using the example in F2 notes of chapter 20?
Forecast the seasonal variation:
To forecast seasonal variation we need to work out seasonal variance averages.Years———————Quarters—————————-Total
——————–Q1——–Q2——–Q3——–Q4
2000————————————-(-4)—–(+1.75)
2001———-(-0.63)—(+1.50)—(-3.88)—(+1.12)
2002———-(+0.75)–(+4.75)
Average——(+0.06)—(+3.13)—(-3.94)—(+1.44)—-(+0.69)
—————–(-0.17)—-(-0.17)—-(-0.17)—(-0.18)—-(-0.69)
Total———–(-0.11)—(+2.96)—-(-4.11)—(+1.26)——-0Total will always be zero
Could you please tell me how do we forecast next year sales using this seasonal variance average>?
If the next year sales are as follows:
Quarter 1 = 100,000
Quarter 2 = 120,000
Quarter 3 = 150,000
Quarter 4 = 200,000We can be asked calculation on time series like this in paper PM?
I am not sure I understand what you have typed because you have already typed what next yours sales are forecast to be!
If the figures you are typed are the forecasts for the trend, then to aces account of the seasonality you would subtract 0.11 from the quarter 1 forecast, add 2.96 to the quarter 2 forecast, and so on.
If the sales trend for next year is as follows:
Quarter 1 = 100,000
Quarter 2 = 120,000
Quarter 3 = 150,000
Quarter 4 = 200,000Then we can forecast the next years sales using seasonal variations averages.
Years———————Quarters—————————-Total
——————–Q1——–Q2——–Q3——–Q4
2000————————————-(-4)—–(+1.75)
2001———-(-0.63)—(+1.50)—(-3.88)—(+1.12)
2002———-(+0.75)–(+4.75)
Average——(+0.06)—(+3.13)—(-3.94)—(+1.44)—-(+0.69)
—————–(-0.17)—-(-0.17)—-(-0.17)—(-0.18)—-(-0.69)
Total———–(-0.11)—(+2.96)—-(-4.11)—(+1.26)——-0Forecast = Trend sales +/- seasonal variation average
Quarter 1 = $100,000 – (10000 x 0.11) = $98900
Quarter 2 = $120,000 + (10000 x 2.96) = $90400
Quarter 3 = $150,000 – (10000 x 4.11) = $108900
Quarter 4 = $200,000 + (10000 x 1.26) = $187400I am taking seasonal variation averages in ten thousands (‘0000)
Is that correct?
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