A time series is believed to consist of random fluctuation, as well as seasonality, but no evidence of a trend is present. Which forecasting tool would be most appropriate?
A) Simple exponential smoothing
B) Simple moving average
C) Simple linear regression
D) Seasonal indices

Question

Quizplus · Accepted Answer

Given the presence of seasonality and the absence of a trend in the time series, seasonal indices are the most appropriate forecasting tool. They allow for the adjustment of forecasts based on seasonal patterns observed in the data, which neither simple exponential smoothing, simple moving average, nor simple linear regression directly account for.

A Time Series Is Believed to Consist of Random Fluctuation