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Hello sir this is a question from the pre mock june 22. I don’t have any idea how to calculate this can you explain it to me?
Question : The company uses a multiplication time series model to forecast sales. The trend in the sales is linear and is describe by the equation T=400+10T where T=1 denotes the first quarter of 2006 T=2 denotes the second quarter of 2006.
Quarter 1 2. 3. 4
%variation. – 30 +40 +10 – 20
What is the sales forecast for 3rd quarter? The answer is 517 units.The question asks for the forecast for the 3rd quarter of 2007.
If you count the quarters starting with the first quarter of 2006, then the 3rd quarter of 2007 is the 7th quarter, and therefore T = 7.
Therefore the trend = 400 + (10 x 7) = 470.
The seasonal variation for quarter 3 is +10%. 470 + (10% x 470) = 517.
(Time series analysis and correlation and regression are both revision from Paper MA and you can find free lectures on both in the FA section of this website.)
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