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Multiplicative time series model

The seasonal effect is expressed as a factor rather than a fixed number of units. It can be useful when seasonal variation changes proportionally with the level of the series. Use the correct factor and ensure it matches the period; historical relationships may not persist.

Worked example

A quarterly trend forecast is 200 units and its seasonal factor is 1.15. The multiplicative forecast is 200 × 1.15 = 230 units.

Common mistake

Adding 1.15 units to the trend or confusing a 15% increase with a factor of 0.15.

Where it appears in your exams

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