A line of best fit has been established for the trend of sales in a business over four quarters.
The equation line is
Total sales unit = 6300 + (30*quarter number)
The seasonal variation are
Quarter 1 -50
Quarter 2 +10
Quarter 3 +140
Quarter 4 -90
What are the forecast sales units in quarter 5 using the addictive model?
Ans- 6450 units
Let seasonal variation of 5th quarter be X
-50+10+130-90+X=5
X=5
Total sales unit=6300+(30*5)=6450
I am not sure if i am correct or not or the steps I have this correct.
Thanks in advance :)
Ask the Tutor ACCA MA
Forecasting
10y ago#1There are only 4 quarters in a year!!!
Using the equation for the trend line, the trend for quarter 5 is 6300 + (30 x 5) = 6450.
Since quarter 5 is the first quarter of next year, the forecast is the trend as adjusted by the quarter 1 seasonal variation which is 6450 - 50 = 6400.
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