What would be the appropriate way to forecast sales for a firm that has stable year-to-year sales,but seasonally fluctuating month-to-month sales?
A)Forecasts would need to be adjusted for a trend, but would not need a regression to adjust for seasonality.
B)Forecasts would need to be adjusted for seasonality, but would not need a regression to adjust for a trend.
C)Ignore both the trend and the seasonality.
D)None of these.

Question

Quizplus · Accepted Answer

Since the sales are stable year-to-year, a regression to adjust for trend is not necessary. However, since there are seasonally fluctuating month-to-month sales, adjusting for seasonality is necessary to accurately forecast sales. Therefore, option B is the best choice.

What Would Be the Appropriate Way to Forecast Sales for a Firm