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 the options.

Question

Quizplus · Accepted Answer

Given the firm has stable year-to-year sales but experiences seasonally fluctuating month-to-month sales, the appropriate forecasting method would involve adjusting for seasonality. This is because the primary variation in sales is not due to a long-term trend but rather due to changes within the year. Adjusting for seasonality helps in accurately predicting sales for each month, taking into account the expected seasonal fluctuations.

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