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Additive time series model

Use an additive model when the seasonal effect is expressed as a roughly constant number of units across the relevant level of the series. Forecast by adding the stated seasonal adjustment to the trend; negative adjustments reduce it. Check the model and question assumptions rather than switching automatically between additive and multiplicative methods.

Worked example

A trend forecast is $100,000 and the seasonal adjustment is −$15,000. The additive forecast is $85,000.

Common mistake

Multiplying the trend by a seasonal amount instead of adding it, or confusing a negative adjustment with a negative factor.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027