ICAEW BIP · Chapter 8 · Question 4 of 10
A company uses a multiplicative time series model. The trend forecast for quarter 3 sales is 4,200 units and the seasonal index for quarter 3 is 1.15. What is the forecast sales volume for quarter 3?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 4,830 units
Explanation
In a multiplicative model, forecast = trend x seasonal index = 4,200 x 1.15 = 4,830 units. A seasonal index of 1.15 means sales in that quarter are usually 15% above the trend.
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