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Forecast for a time series with trend and seasonal factors

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The following table shows the past two years of quarterly sales information. Assume that there are both trend and seasonal factors and that the seasonal cycle is one year. Use time series decomposition to forecast quarterly sales for the next year.

Quarter Sales Quarter Sales
1 160 5 215
2 195 6 240
3 150 7 205
4 140 8 190

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Solution Preview

See the attached file for complete solution.

To forecast the demand, following steps are required.
First , we compute the seasonality Indexes
a. Segregate the volume quarter wise
b Calculate overall quarter average
c. Calculate quarter averages
d. calculate seasonal Index = Quarter average / Overall Quarter average

Year Quareterly Sales Annual
Q1 Q2 Q3 Q4 Total
1 160.00 195.00 150.00 140.00 645.00
2 215.00 240.00 205.00 190.00 850.00
Total 375.00 435.00 355.00 330.00 1495.00
Overall Quarter Average 186.88
Quarter ...

Solution Summary

Shows how to forecast for a time series involving both trend and seasonality.

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