Page 279 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 279
Statistical techniques
5.6 Forecasting
Once the seasonal variations have been calculated they can be used to forecast
future values.
The trend line is extrapolated and the variations are applied to the trend
Additive model forecast = T + S (where T = the trend line and S = the seasonal
variation).
Multiplicative model forecast = T × S (S is normally represented as a percentage).
Test your understanding 6
Consider a business with the following actual results in a year:
Year Quarter Actual units Trend Additive Multiplicative
sold variation variation
20X1 1 65 60
20X1 2 80 70
20X1 3 70 80
20X1 4 85 90
(a) Using the additive model forecast unit sales in each quarter of year 2
Year Quarter Trend Variation Forecast
20X2 1 100
20X2 2 110
20X2 3 120
20X2 4 130
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