Sir can you explain how they arrived at t = 8. Using an additive time series model, the quarterly trend (Y) is given by Y= 65-7t, where t is the quarter( starting with t = 1 in the first quarter of 20X5). If the seasonal component in the fourth quarter is -30, what is the forecast for the actual value for the fourth quarter of 20X6, to the nearest whole number?
(A) 63
(B) 546
(C) 85
(D) 91
Answer Trend(y) + 65+(7*8) = 121
Forcast = trend + seasonal component
= 121+(-30)
= 121-30
= 91
Can you explain how this is the answer. Thanks
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Forcasting
8y ago#1There are 4 quarters in a year.
So first quarter of 20X5: t = 1
second qtr of 20X5: t = 2
Third qtr: t = 3
Fourth qtr: t = 4
First qtr of 20X6: t = 5
second qtr of 20X6: t = 6
Third qtr: t = 7
Fourth qtr: t = 8
So use t = 8 in the formula to get the forecast, but then adjust by the seasonal variation of 30 as is explained in my free lectures on this.
thanks sir for your great explanation
8y ago#3You are welcome :-)
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