Time series analysis and forecasting using time series decomposition method is following:
FORMULAS:
Cell | Formula | Copy to |
E2 | =FORECAST(C2,$D$2:$D$21,$C$2:$C$21) | E2:E25 |
F2 | =D2/E2 | F2:F21 |
G2 | =AVERAGE(F2,F6,F10,F14,F18) | G2:G5 |
G6 | =G2 | G6:G25 |
H2 | =E2*G2 | H2:H25 |
(1) In the time series graph, it is noticeable that sales is lowest in quarter 2 and highest in quarter 3 of very year. This pattern repeats every four quarters, this indicates presence of seasonal variation.
(2) Values of seasonal indices are:
Quarter 1 = 0.897
Quarter 2 = 0.501
Quarter 3 = 1.385
Quarter 4 = 1.152
(3) The time series graph of sales shows that every peak and trough is higher than the previous years. This indicates an upward trend.
(4) Values of regression coefficients are:
Intercept, a = 1685.9
Slope, b = 41.195
This means that sales increases by 41.195 every quarter.
(5) Forecast of sales for year 6 is following:
Quarter 1 = 2382
Quarter 2 = 1352
Quarter 3 = 3807
Quarter 4 = 3221
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