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Section 7.5: Forecasting Using Seasonal indices

Quantitative Decision Making 7 th ed By Lapin and Whisler. Section 7.5: Forecasting Using Seasonal indices. Recall: Classical Time Series Model. Y t = T t ·C t ·S t ·I t T t : The trend component C t : The cyclic component S t : The seasonal component I t : The irregular component.

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Section 7.5: Forecasting Using Seasonal indices

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  1. Quantitative Decision Making 7th ed By Lapin and Whisler Section 7.5: Forecasting Using Seasonal indices

  2. Recall: Classical Time Series Model • Yt= Tt·Ct·St·It • Tt: The trend component • Ct: The cyclic component • St: The seasonal component • It: The irregular component

  3. Isolate trend and cyclical elements together. Four-quarter moving averages Ratio-to-moving-average method

  4. Add up the first four values in a time series, then divide by four. Repeat this computation, but the initial quarter is dropped and the fifth is added. Continue this process until you run out of new quarters. Finding a four quarter moving average

  5. Example – Four Quarter Moving Average

  6. Example – Centered Moving average

  7. Removing the irregular component with the median percentage of moving average

  8. Calculating Seasonal Indices

  9. Seasonal Indices

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