Dear Tutor
Can please explain on this further,
The following variations and trend have been calculated for sales over a period of time using the additive model:
Seasonal variation
Quarter 1 +25
Quarter 2 -10
Quarter 3 -30
Quarter 4 ?
Trend +50
The last known trend reading was taken in year 3, quarter 3 and was $1,750.
Q1. What would be the seasonal variation for quarter 4?
The answer for this is +15
If based on the formula it is = Trend + Seasonal variation + random variation, I get 25,
50 + 15 - 40 = 25 (my answer is 25),
Q2. What would be the time series value for year 4 quarter 3?
Year 3 $1,750 + year 4 (4 x 50 (the trend as stated) ) minus year 3 (-30)
The answer is $1,920. (my understanding of calculation is this way) is this right?
Thank you
Ask the Tutor ACCA MA
Seasonal variation
8y ago#1You really must watch my free lectures on this - you can't expect me to type out my lectures here :-)
Q1: The seasonal variations (using the additive model) should add up to zero (your formula is of no relevance whatsoever). To make them add up to zero, then quarter 4 must be +15.
Q2: Your answer is correct (does the answer in your book not agree?)
Again, please watch my lectures on this.
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