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LPM Co has identified the trend line relating to its sales revenue as 2,000 + 25X.
X denotes the quarter number, with the first quarter of 20X5 being 13, the second quarter of 20X5 being 14, etc.
LPM Co uses the multiplicative model and has calculated the following seasonal variations:
Quarter 1: -0.20
Quarter 2: -0.08
Quarter 3: +0.04
Quarter 4: +0.24
What is LPM Co’s seasonally adjusted sales revenue forecast for the second quarter of 20X7?
Trend line = 2000+25x
we get Trend = 2000+25*22 ( Q2 20×7 ) = 2550
seasonal variance is given in number we need to convert into % right -0.08*100=-8%Y=T*S=2550*(1-0.08) = 2346 please correct my mistake !
Does the Additional method and the Multiplicative method will give the same answer??
Your last line is wrong.
It should be 2550 – (0.08 x 2550) = 2346.
(Where did you find this question, because the seasonal variations are not usually presented in this way when it is the multiplicative model?)
No – the two methods do not gives the same answers.
Have you not watched my free lectures on time series analysis?
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