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CMA Final · Strategic Cost Management · Business Forecasting Models - Time Series and Regression Analysis

In a seasonal analysis using the multiplicative model, a Kolkata firm's deseasonalised sales trend for next quarter is Rs 8,00,000 and the seasonal index for that quarter is 115%. What is the seasonal forecast of sales?

The seasonal forecast is Rs 9,20,000, obtained by multiplying the trend value of Rs 8,00,000 by the seasonal index of 1.15 under the multiplicative model. Dividing by the index would wrongly remove seasonality.

  1. ARs 9,20,000Correct
  2. BRs 6,95,652
  3. CRs 8,15,000
  4. DRs 7,85,000

Explanation

Multiplicative model: forecast = trend x seasonal index = 8,00,000 x 1.15 = 9,20,000. Dividing by 1.15 (6,95,652) would deseasonalise instead of seasonalise.

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