Hello.. Sir I really couldn’t understand the purpose of multiplicative model

Actually I understood what it waana convey and its meaning ,but i counldnt understand why it is an alternative way to additive model In an other word whats the problem with additive model…!?

If sales grow a lot then you would expect the seasonal variation to grow a lot as well. With the additive model the seasonal variation stays the same. With the multiplicative model it will increase as well.

I am bit confused between underlying trend and seasonally adjusted figure. The centered avg we calculated, if i am not wrong is seasonally adjusted figure ?

cinaa2 says

Thanks alot for your perfect clarification sir 馃檪

cinaa2 says

Hello..

Sir

I really couldn’t understand the purpose of multiplicative model

Actually I understood what it waana convey and its meaning ,but i counldnt understand why it is an alternative way to additive model

In an other word whats the problem with additive model…!?

John Moffat says

If sales grow a lot then you would expect the seasonal variation to grow a lot as well. With the additive model the seasonal variation stays the same. With the multiplicative model it will increase as well.

cinaa2 says

Thanks alot for your perfect clarification sir聽馃檪

hammadmarfani says

Sir,

I am bit confused between underlying trend and seasonally adjusted figure. The centered avg we calculated, if i am not wrong is seasonally adjusted figure ?

John Moffat says

The centred average is the trend, and from this we can calculate the average seasonal variations.

The seasonally adjusted figures are where we take the actual figures and adjust them by the seasonal variations.