The trend of a product has been calculated as a decrease in sales of 2 units/quarter
and seasonal variation of Q4 = -15
Sales for Q4 2017 is 320 units
using additive model what is predicted sales for Q4 2018 ?
320 + (- 2* 4 quarter) + (-15) = 297 units
but answer says 312
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Time series
6y ago#1If you have typed it all out correctly then it seems that the answer is 297 units.
Does the answer in your book not show the workings also?
320- 15 + (- 2* 4 quarter) + (-15) = 312 units
this is the working
6y ago#3My mistake - the answer is correct.
If the actual sales in Q4 2017 were 320, then because there is a seasonal variation of -15, the trend would be 320 + 15 = 335.
Therefore for Q4 2018, the forecast is 335 - (4x2) - 15 = 312
but that seasonal variation is what we are adjusting at the end isnt it ? why adjust it twice ?
6y ago#5The seasonal variation will occur in every Q4. So the actual sales in 2017 will include the effect of the seasonal variation.
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