Which of the following best describes the decomposition modeling approach to forecasting?
A)The values of certain variables are used to predict the values of others.
B)Series are separated into trend, seasonal, irregular, and cyclical components.
C)Forecasts are based on an average of recent values.
D)Sophisticated models such as regression with binaries are preferred.

Question

Quizplus · Accepted Answer

The decomposition modeling approach involves separating time series data into its trend, seasonal, irregular, and cyclical components in order to make more accurate forecasts. This method recognizes that different components of a time series may have different patterns and drivers, and should be analyzed separately before combining into a forecast.

Which of the Following Best Describes the Decomposition Modeling Approach