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4QA3 F12 Week 5 Lecture Notes

# To initialize the method one can lit a linear

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Unformatted text preview: odels multiplicative compared using a linear trend o  Additive, o  ●  Additive model Demand = Trend + Seasonality Multiplicative. In practice, the multiplicative model is used much more widely than the additive model: ( ) Dt = µ + Gt ct + εt 4QA3 F12 Multiplicative model Demand = Trend x Seasonality Source: Stevenson& Hojati Time 31 model, seasonality is expressed as a percentage of the aver ●  The purpose is to lind multiplicative seasonal factors: c1, c2 , . . . , cN. ●  ci represents the average percentage that the demand in the ith period of the season is above or below the overall average. 1.  Compute the sample mean of the entire data set. 2.  Divide each observation by the sample mean 3.  Average the factors for like periods in a season. 4QA3 F12 Source: Nahmias (2009) 32 Year...
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