ExpertMedium2 marksMultiple Choice
ACCA · Question 05 · Data Analysis and Statistical Techniques
A cross-border logistics company uses an additive time series model to forecast shipping volumes. The trend equation is T = 5,000 + 200Q (where Q is the quarter number, starting with Q=1 for Q1 20X1). The seasonal variation for Quarter 3 is +450.
What is the forecast for shipping volumes in Quarter 3 of 20X2 (Q=7)?
A cross-border logistics company uses an additive time series model to forecast shipping volumes. The trend equation is T = 5,000 + 200Q (where Q is the quarter number, starting with Q=1 for Q1 20X1). The seasonal variation for Quarter 3 is +450.
What is the forecast for shipping volumes in Quarter 3 of 20X2 (Q=7)?
Answer options:
A.
6,400
B.
6,850
C.
5,600
D.
7,050
How to approach this question
1. Calculate the trend value by substituting Q=7 into the equation. 2. Add the seasonal variation for Q3 to the trend value.
Full Answer
B.6,850✓ Correct
First, find the trend value for Q=7: T = 5,000 + 200(7) = 5,000 + 1,400 = 6,400.
Since it is an additive model, Forecast = Trend + Seasonal Variation.
Forecast = 6,400 + 450 = 6,850.
Common mistakes
Using a multiplicative model (multiplying by 1.045) instead of additive, or miscounting the quarter number.
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