Multiplicative Seasonal Trend Relationship

Multiple seasonal trend relationship is a forecasting method whereby seasonal factors are multiplied by an estimate of the average demand to arrive at the seasonal forecast. The following steps must be followed while calculationStep 1: calculate the average demand y per period for each year (y) of past data by dividing total demand for the year by the number of periods in the year. Step 2: divide the actual demand Dy,t for each period (t) by the average demand y per period (calculated in Step 1) to get a seasonal factor fy,t for each period; repeat for each year of data. Step 3: calculate the average seasonal factor t for each period by summing all the seasonal factors fy,t for that period and dividing by the number of seasonal factors. Step 4: determine the forecast for a given period in a future year by multiplying the average seasonal factor t by the forecasted demand in that future year.

Example Actual Data for Three Years Year 1 2 3 Q1 100 120 134 Q2 70 80 80 Q3 60 70 70 Q4 90 110 100 Total 320 380 381

Finding out the Average demand Dy Year 1 2 3 Q1 100 120 134 Q2 70 80 80 Q3 60 70 70 Q4 90 110 100 Total 320 380 381 Average Dy 80 95 96

Finding out the seasonal Factor ( SF) Year 1 2 3 Average S F Q1 1.25 1.26 1.4 1.30 Q2 0,875 0.84 0.83 0.85 Q3 0.75 0.74 0.73 0.74 Q4 1.125 1.16 1.04 1.083

Seasonal Factor - the percentage of average quarterly demand that occurs in each quarter. Annual Forecast for year 4 is predicted to be 400 units. Average forecast per quarter is 400/4 = 100 units. Quarterly Forecast = avg. forecast seasonal factor.
y y y y

Q1: 1.303(100) = 130 Q2: .85(100) = 85 Q3: .74(100) = 74 Q4: 1.083(100) = 108