Contents

Spreadsheet
Add and Mult Models
Methods and Errors
Trend Comparison

Spreadsheets for Error

Computations for
Methods and Errors
Worksheet
Trend Anal
Mult Decomp - Overall Avg
Mult Decomp - CMA
Add Decomp - Overall Avg
Add Decomp - CMA

Note: The steps involved in the 4 decomposition models are annotated on each of the decomposition

Contents

A comparison of the additive and multiplicative models; demonstration of effects of trend, seasonality
Comparison of behavior of Trend Analysis and four Decomposition Models
Demonstration of relationship between quarterly and annual trends

Contents
Computation
Computation
Computation
Computation
Computation

of
of
of
of
of

forecasts
forecasts
forecasts
forecasts
forecasts

and
and
and
and
and

errors
errors
errors
errors
errors

using
using
using
using
using

trend analysis
multiplicative decomposition and basing the seasonal facto
multiplicative decomposition and basing the seasonal facto
additive decomposition and basing the seasonal factors on
additive decomposition and basing the seasonal factors on

n the 4 decomposition models are annotated on each of the decomposition spreadsheets.

ty and randomness

ctors on the overall average

tors on 4 quarter centered moving averages
on the overall average
on 4 quarter centered moving averages

Base (Yr1-Q1)
Trend (Quarterly)
Seasonality
Variability

Parameters
100
10
25
20

Qtr number
Year 1

Year 2

Year 3

Year 4

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

RandBetw
Multiplicat
een
Additive
ive
20
120
120
-4
131
132
3
123
123.6
18
123
115.05
-9
131
127.4
-13
162
163.125
10
170
176
6
151
135.15
-12
168
158.4
-15
200
201.875
-2
198
196
11
196
174.825
-14
206
189.2
-2
253
281.75
8
248
259.2
7
232
200.625

332010607.xls

Randomly Generated
300
Additive

250
200
150
100
50
0
1

8
9
Quarter

10

Generated Time Series

8
9
Quarter

10

11

12

13

14

15

16

332010607.xls

Parameters
100
5
10
9

Qtr number
Year 1

Year 2

Year 3

Year 4

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Demand
92
106
105
99
127
138
137
128
136
161
141
150
160
172
161
165

Method
Trend analysis
Mult Decomp (avg all)
Mult Decomp (CMA )
Add Decomp (avg all)
Add Decomp (CMA)

MAD
7.56
6.78
5.29
6.77
4.77

MSE
77.38
60.70
33.23
61.86
31.17

MAPE
5.72%
5.19%
4.00%
5.17%
3.68%

Randomly Generated Time Se

200
180
160
Demand

Base (Yr1-Q1)
Trend (Quarterly)
Seasonality
Variability

140
120
100
80
60
40
20

332010607.xls

0
1

10

11

12

60
40
20
0
1

Quarter

332010607.xls

10

11

12

Identified
Trend
4.929
4.864
5.221
4.859
5.190

Time Series

10

332010607.xls
11

12

13

14

15

16

10

11

12

13

14

15

16

Could delete expo smooth

all other methods compute the trend
Conditional format may not distinguish well enough

332010607.xls

Parameters
100
0.1
0
0
Qtr number

Year 1

Year 2

Year 3

Year 4

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Demand
100
100.1
100.2
100.3
100.4
100.5
100.6
100.7
100.8
100.9
101
101.1
101.2
101.3
101.4
101.5

Quarterly Trend

0.1

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

Year

Demand
1
2
3
4

Annual Trend

400.6
402.2
403.8
405.4
1.6

Rando
102

Demand

Base (Yr1-Q1)
Trend (Quarterly)
Seasonality
Variability

101.5

101

100.5

100

99.5

99
1

Ratio of Annual Trend to Quarterly Trend

16

332010607.xls

Randomly Generated Time Series

102

01.5

101

00.5

100

99.5

99
1

10

11

12

13

14

15

16

Quarter

332010607.xls

Forecasting

Data
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Intercept
Slope

Actual
quarterly trend

Trend projection

Forecasts
Forecast
99.154412
104.08382
109.01324
113.94265
118.87206
123.80147
128.73088
133.66029
138.58971
143.51912
148.44853
153.37794
158.30735
163.23676
168.16618
173.09559

Demand (y) Period(x)

92
1
106
2
105
3
99
4
127
5
138
6
137
7
128
8
136
9
161
10
141
11
150
12
160
13
172
14
161
15
165
16
94.225
4.9294118

4.929
Year
Year
Year
Year

1
2
3
4

Annual trend

Annual
Demand
402
530
588
658
82.6

and Error Analysis

Error
Absolute
-7.154412 7.1544118
1.9161765 1.9161765
-4.013235 4.0132353
-14.94265 14.942647
8.1279412 8.1279412
14.198529 14.198529
8.2691176 8.2691176
-5.660294 5.6602941
-2.589706 2.5897059
17.480882 17.480882
-7.448529 7.4485294
-3.377941 3.3779412
1.6926471 1.6926471
8.7632353 8.7632353
-7.166176 7.1661765
-8.095588 8.0955882
Average 7.556066
MAD

Squared
Abs Pct Err
51.185608
07.78%
3.6717323
01.81%
16.106058
03.82%
223.2827
15.09%
66.063428
06.40%
201.59824
10.29%
68.378307
06.04%
32.038929
04.42%
6.7065766
01.90%
305.58125
10.86%
55.48059
05.28%
11.410487
02.25%
2.8650541
01.06%
76.794293
05.09%
51.354085
04.45%
65.538549
04.91%
77.37849
05.72%
MSE
MAPE

Forecasting

Multiple decomposition using the overall average as the basis for seasonality
Forecasts

Data
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Step 1

Step 3
Ratios
Year 1
Year 2
Year 3
Year 4
Average

Demand (y) Time (x)

92
1
106
2
105
3
99
4
127
5
138
6
137
7
128
8
136
9
161
10
141
11
150
12
160
13
172
14
161
15
165
16

From Step
1
Average
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125
136.125

136.125 (average)

Season 1
Season 2
Season 3
Season 4
0.676
0.779
0.771
0.727
0.933
1.014
1.006
0.940
0.999
1.183
1.036
1.102
1.175
1.264
1.183
1.212
0.946
1.060
0.999
0.995

Step 2
Ratio
0.676
0.779
0.771
0.727
0.933
1.014
1.006
0.940
0.999
1.183
1.036
1.102
1.175
1.264
1.183
1.212
Step 5

From step
3
Step 4
Step 6
Step 7
Error Analysis
Seasonal Smoothed Unadjusted Adjusted Error
|Error|
Error^2
Abs Pct Err
0.946
97.270
99.643
94.245
-2.245
2.245
5.038
02.44%
1.060
100.029
104.507
110.745
-4.745
4.745
22.516
04.48%
0.999
105.097
109.372
109.271
-4.271
4.271
18.242
04.07%
0.995
99.457
114.236
113.711
-14.711
14.711
216.422
14.86%
0.946
134.275
119.100
112.647
14.353
14.353
205.996
11.30%
1.060
130.227
123.964
131.363
6.637
6.637
44.043
04.81%
0.999
137.126
128.829
128.710
8.290
8.290
68.719
06.05%
0.995
128.590
133.693
133.079
-5.079
5.079
25.797
03.97%
0.946
143.790
138.557
131.050
4.950
4.950
24.499
03.64%
1.060
151.932
143.421
151.982
9.018
9.018
81.326
05.60%
0.999
141.130
148.286
148.150
-7.150
7.150
51.115
05.07%
0.995
150.692
153.150
152.447
-2.447
2.447
5.987
01.63%
0.946
169.165
158.014
149.453
10.547
10.547
111.233
06.59%
1.060
162.312
162.878
172.600
-0.600
0.600
0.360
00.35%
0.999
161.148
167.743
167.589
-6.589
6.589
43.411
04.09%
0.995
165.761
172.607
171.815
-6.815
6.815
46.438
04.13%
Average
6.778
60.696
05.19%
Intercept
94.779
MAD
MSE
MAPE
Slope
4.864

Step
Step
Step
Step
Step
Step
Step
Step

1:
2:
3:
4:
5:
6:
7:
8:

Identify the basis for smoothing - in this case the overall average.
For each period, take the ratio of the actual to the overall average.
Sort the ratios by season and find the average ratio for each season - these are the seasonal factors
Deseasonalize (smooth) the data. Set the deseasonalized value = actual/seasonal factor
Compute the linear regression line for the smoothed data
Use the linear regression line to compute the unadjusted forecasts: F=intercept+slope*t where t is the period
Compute the adjusted forecast by multiplying the unadjusted forecast by the seasonal factor
Use the actual data and the adjusted forecasts to compute the error measures.

Forecasting

Data
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Multiple decomposition using the centered moving averag

Demand (y)Time (x)

92
106
105
99
127
138
137
128
136
161
141
150
160
172
161
165

Step 1
CMA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

104.875
113.250
121.250
128.875
133.625
137.625
141.000
144.250
150.000
154.375
158.250
162.625

Step 2
Ratio

1.001
0.874
1.047
1.071
1.025
0.930
0.965
1.116
0.940
0.972
1.011
1.058

Step 5

Step 3
Ratios
Year 1
Year 2
Year 3
Year 4
Average

Season 1

Season 2

1.047
0.965
1.011
1.008

1.071
1.116
1.058
1.082

Season 3
1.001
1.025
0.940

Season 4
0.874
0.930
0.972

0.989

0.925

Future Forecasts
Period
Unadjusted Seasonal
Adjusted
17 180.66072 1.00767338
182.047
18 185.88187 1.081523619 201.03564
19 191.10303 0.988816382 188.9658
20 196.32418 0.925298561 181.65848

From step 3
Seasonal
1.008
1.082
0.989
0.925
1.008
1.082
0.989
0.925
1.008
1.082
0.989
0.925
1.008
1.082
0.989
0.925
Intercept
Slope

Step
Step
Step
Step
Step
Step
Step
Step

1:
2:
3:
4:
5:
6:
7:
8:

red moving average (CMA) as the basis for seasonality

Forecasts
Step 4
Step 6
Step 7
Forecasts and Error Analysis
Smoothed
Unadjusted
Adjusted
Error
|Error|
Error^2
Abs Pct Err
91.299
97.122
97.868
-5.868
5.868
34.428
06.38%
98.010
102.343
110.687
-4.687
4.687
21.966
04.42%
106.188
107.565
106.362
-1.362
1.362
1.854
01.30%
106.992
112.786
104.360
-5.360
5.360
28.734
05.41%
126.033
118.007
118.912
8.088
8.088
65.410
06.37%
127.598
123.228
133.274
4.726
4.726
22.335
03.42%
138.549
128.449
127.013
9.987
9.987
99.747
07.29%
138.334
133.670
123.685
4.315
4.315
18.620
03.37%
134.964
138.891
139.957
-3.957
3.957
15.660
02.91%
148.864
144.113
155.861
5.139
5.139
26.407
03.19%
142.595
149.334
147.664
-6.664
6.664
44.405
04.73%
162.110
154.555
143.009
6.991
6.991
48.868
04.66%
158.782
159.776
161.002
-1.002
1.002
1.004
00.63%
159.035
164.997
178.448
-6.448
6.448
41.582
03.75%
162.821
170.218
168.315
-7.315
7.315
53.506
04.54%
178.321
175.440
162.334
2.666
2.666
7.108
01.62%
Average
5.286
33.227
3.999%
91.901
MAD
MSE
MAPE
5.221

Identify the basis for smoothing - in this case the 4 period centered moving average
For each period, take the ratio of the actual to the overall average.
Sort the ratios by season and find the average ratio for each season - these are the seasonal factors
Deseasonalize (smooth) the data. Set the deseasonalized value = actual/seasonal factor
Compute the linear regression line for the smoothed data
Use the linear regression line to compute the unadjusted forecasts: F=intercept+slope*t where t
Compute the adjusted forecast by multiplying the unadjusted forecast by the seasonal factor
Use the actual data and the adjusted forecasts to compute the error measures.

e the seasonal factors

onal factor

cept+slope*t where t is the period

seasonal factor

Forecasting

Data
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Step 1

Step 3
Differences
Year 1
Year 2
Year 3
Year 4
Average

Additive decomposition using the overall average as th

Demand (y) Time (x)

92
106
105
99
127
138
137
128
136
161
141
150
160
172
161
165

From Step 1
Step 2
Average
Difference
136.125
-44.125
136.125
-30.125
136.125
-31.125
136.125
-37.125
136.125
-9.125
136.125
1.875
136.125
0.875
136.125
-8.125
136.125
-0.125
136.125
24.875
136.125
4.875
136.125
13.875
136.125
23.875
136.125
35.875
136.125
24.875
136.125
28.875

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

136.125 (average)

Season 1
-44.125
-9.125
-0.125
23.875
-7.375

Season 2
-30.125
1.875
24.875
35.875
8.125

Future Forecasts
Period
Unadjusted Seasonal
17
177.425
-7.375
18 182.283824
8.125
19 187.142647
-0.125
20 192.001471
-0.625

Step 5

Season 3
-31.125
0.875
4.875
24.875
-0.125

Adjusted
-1308.50938
1481.05607
-23.3928309
-120.000919

Season 4
-37.125
-8.125
13.875
28.875
-0.625

overall average as the basis for seasonality

Forecasts
From step 3
Step 4
Seasonal
Smoothed
-7.375
99.375
8.125
97.875
-0.125
105.125
-0.625
99.625
-7.375
134.375
8.125
129.875
-0.125
137.125
-0.625
128.625
-7.375
143.375
8.125
152.875
-0.125
141.125
-0.625
150.625
-7.375
167.375
8.125
163.875
-0.125
161.125
-0.625
165.625

Step 6
Unadjusted
99.683823529
104.54264706
109.40147059
114.26029412
119.11911765
123.97794118
128.83676471
133.69558824
138.55441176
143.41323529
148.27205882
153.13088235
157.98970588
162.84852941
167.70735294
172.56617647

Step 7
Adjusted
92.308824
112.66765
109.27647
113.63529
111.74412
132.10294
128.71176
133.07059
131.17941
151.53824
148.14706
152.50588
150.61471
170.97353
167.58235
171.94118

Forecasts and
Error
|Error|
-0.308824 0.3088235
-6.667647 6.6676471
-4.276471 4.2764706
-14.63529 14.635294
15.255882 15.255882
5.8970588 5.8970588
8.2882353 8.2882353
-5.070588 5.0705882
4.8205882 4.8205882
9.4617647 9.4617647
-7.147059 7.1470588
-2.505882 2.5058824
9.3852941 9.3852941
1.0264706 1.0264706
-6.582353 6.5823529
-6.941176 6.9411765
Average
6.7669118
MAD

Error Analysis
Error^2
0.095372
44.457517
18.288201
214.19183
232.74195
34.775303
68.694844
25.710865
23.238071
89.524991
51.08045
6.2794464
88.083746
1.0536419
43.32737
48.179931
61.857721
MSE

Intercept
Slope

94.825
4.85882353

Step
Step
Step
Step
Step
Step
Step
Step

Identify the basis for smoothing - in this case the overall average.
For each period, take the difference of the actual to the overall average.
Sort the differences by season and find the average difference for each season - these
Deseasonalize (smooth) the data. Set the deseasonalized value = actual - seasonal f
Compute the linear regression line for the smoothed data
Use the linear regression line to compute the unadjusted forecasts: F=intercept+sl
Compute the adjusted forecast by adding the seasonal factor to the unadjusted forecas
Use the actual data and the adjusted forecasts to compute the error measures.

1:
2:
3:
4:
5:
6:
7:
8:

rror Analysis
Abs Pct Err
00.34%
06.29%
04.07%
14.78%
12.01%
04.27%
06.05%
03.96%
03.54%
05.88%
05.07%
01.67%
05.87%
00.60%
04.09%
04.21%
05.17%
MAPE

for each season - these are the seasonal factors

= actual - seasonal factor

asts: F=intercept+slope*t where t is the period

the unadjusted forecast
ror measures.

Forecasting

Data
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period
Period

Additive decomposition using the centered moving av

Demand (y)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Step 1
Average

Time (x)

92
106
105
99
127
138
137
128
136
161
141
150
160
172
161
165

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

104.875
113.25
121.25
128.875
133.625
137.625
141
144.25
150
154.375
158.25
162.625

Step 2
Difference

0.125
-14.25
5.75
9.125
3.375
-9.625
-5
16.75
-9
-4.375
1.75
9.375

Step 5

Step 3
Differences
Year 1
Year 2
Year 3
Year 4
Average

Season 1
5.75
-5
1.75
0.83333333

Season 2

Season 3
Season 4
0.125
-14.25
9.125
3.375
-9.625
16.75
-9
-4.375
9.375
11.75 -1.8333333 -9.4166667

Future Forecasts
Period
Unadjusted
Seasonal
Adjusted
17
179.908
0.833
180.742
18
185.099
11.750
196.849
19
190.289
-1.833
188.455
20
195.479
-9.417
186.062

e centered moving average (CMA) as the basis for seasonality

Forecasts
From step
3
Seasonal
0.8333333
11.75
-1.833333
-9.416667
0.8333333
11.75
-1.833333
-9.416667
0.8333333
11.75
-1.833333
-9.416667
0.8333333
11.75
-1.833333
-9.416667

Step 4
Smoothed
91.166667
94.25
106.83333
108.41667
126.16667
126.25
138.83333
137.41667
135.16667
149.25
142.83333
159.41667
159.16667
160.25
162.83333
174.41667

Intercept
Slope

91.675
5.1901961

Step
Step
Step
Step
Step
Step
Step
Step

Identify the basis for smoothing - in this case the centered moving average
For each period, take the difference of the actual to the overall average.
Sort the differences by season and find the average difference for each season - these a
Deseasonalize (smooth) the data. Set the deseasonalized value = actual - seasonal fac
Compute the linear regression line for the smoothed data
Use the linear regression line to compute the unadjusted forecasts: F=intercept+slop
Compute the adjusted forecast by adding the seasonal factor to the unadjusted forecast
Use the actual data and the adjusted forecasts to compute the error measures.

1:
2:
3:
4:
5:
6:
7:
8:

Step 6
Step 7
Unadjusted Adjusted
96.865196 97.698529
102.05539 113.80539
107.24559 105.41225
112.43578 103.01912
117.62598 118.45931
122.81618 134.56618
128.00637 126.17304
133.19657 123.7799
138.38676 139.2201
143.57696 155.32696
148.76716 146.93382
153.95735 144.54069
159.14755 159.98088
164.33775 176.08775
169.52794 167.69461
174.71814 165.30147

Forecasts and
Error
|Error|
-5.698529 5.6985294
-7.805392 7.8053922
-0.412255 0.4122549
-4.019118 4.0191176
8.5406863 8.5406863
3.4338235 3.4338235
10.826961 10.826961
4.220098 4.220098
-3.220098 3.220098
5.6730392 5.6730392
-5.933824 5.9338235
5.4593137 5.4593137
0.0191176 0.0191176
-4.087745 4.0877451
-6.694608 6.6946078
-0.301471 0.3014706
Average
4.7716299
MAD

Error Analysis
Error^2
32.473237
60.924147
0.1699541
16.153307
72.943322
11.791144
117.22308
17.809227
10.369031
32.183374
35.210262
29.804106
0.0003655
16.70966
44.817774
0.0908845
31.167055
MSE

rror Analysis
Abs Pct Err
06.19%
07.36%
00.39%
04.06%
06.72%
02.49%
07.90%
03.30%
02.37%
03.52%
04.21%
03.64%
00.01%
02.38%
04.16%
00.18%
0.0368073
MAPE

moving average.
erall average.
ence for each season - these are the seasonal factors
alue = actual - seasonal factor

orecasts: F=intercept+slope*t where t is the period

or to the unadjusted forecast
the error measures.