The decomposition method of forecasting is important to determine what portion of any changes in sales represents an overall,fundamental change in demand and what portion is due to seasonality in demand.

Question

Quizplus · Accepted Answer

The decomposition method of forecasting is typically applied to monthly or quarterly data where a seasonal pattern is evident and the marketing manager wishes to forecast not only for the whole year but also for each period in the year. It is important to determine what portion of any changes in sales represents an overall, fundamental change in demand and what portion is due to seasonality in demand.

The Decomposition Method of Forecasting Is Important to Determine What