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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. ThanksThere 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 = 8So 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.
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