Multiplicative Decomposition of a Time Series

Data: Quarterly Sales of a board game at a small department store. A plot of the data is
below. There appears to be increasing seasonal variation in the data. Therefore, a
multiplicative model may be appropriate.

Time Series Plot of Sales

60

Sales

50

40

30

20
Q1

Q2

Q3

Q4

Q1

Q2
Q3
Quarter

Q4

Q1

Q2

Q3

Q4

To find (centered) moving averages in Minitab: Stat - Time Series - Moving Average.
Choose MA length 4 (4-period moving average), centered. Results: Summary Table and
Results Table.
Moving Average for Sales
Data
Length
NMissing

Sales
12
0

Moving Average
Length

Accuracy Measures
MAPE
MAD
MSD

21.589
8.429
110.143

Time
1
2
3
4
5
6
7
8
9
10
11
12

Sales
20
25
35
44
28
29
43
48
24
37
39
56

MA
*
*
32.0
33.5
35.0
36.5
36.5
37.0
37.5
38.0
*
*

Predict
*
*
*
*
*
32.0
33.5
35.0
36.5
36.5
37.0
37.5

Error
*
*
*
*
*
-3.0
9.5
13.0
-12.5
0.5
2.0
18.5

I created a new column in Minitab (Sales/MA) which contains the initial estimates of the
seasonal component.
Row
1
2
3
4
5
6
7
8
9
10
11
12

Sales
20
25
35
44
28
29
43
48
24
37
39
56

Quarter
1
2
3
4
1
2
3
4
1
2
3
4

AVER1
*
*
32.0
33.5
35.0
36.5
36.5
37.0
37.5
38.0
*
*

Sales/MA
*
*
1.09375
1.31343
0.80000
0.79452
1.17808
1.29730
0.64000
0.97368
*
*

Improve the seasonal component estimates:

(SN)

= (.8+.64)/2 = 0.72

(SN)

= (.79452 + 0.97368)/2 = 0.8841

(SN)

= (1.09375 + 1.17808)/2 = 1.13592

(SN)

= (1.31343 + 1.2973)/2 = 1.30537

Average of these values:

1.01135

Updated seasonal component estimates:

(SN)

= .72/1.01135 = 0.71192

(SN)

= .8841/1.01135 = 0.874178

(SN)

= 1.13592/1.01135 = 1.12317

(SN)

= 1.30537/1.01135 = 1.29072

(Final) Deseasonalized Observations via:

Here's how to get Minitab to do it all at once:
Stat - Time Series - Decomposition, using Multiplicative, Trend plus Seasonal, and
Results: Summary Table and Results Table
Time Series Decomposition for Sales
Multiplicative Model
Data
Length
NMissing

Sales
12
0

Fitted Trend Equation

Yt = 28.5593 + 1.04299*t
Seasonal Indices
Period
1
2
3
4

Index
0.71192
0.87418
1.12317
1.29072

Accuracy Measures
MAPE
MAD
MSD

7.12046
2.38076
7.92420

Time
1
2
3
4
5
6
7
8
9
10
11
12

Sales
20
25
35
44
28
29
43
48
24
37
39
56

Trend
29.6023
30.6453
31.6883
32.7313
33.7743
34.8173
35.8603
36.9033
37.9463
38.9893
40.0322
41.0752

Seasonal
0.71192
0.87418
1.12317
1.29072
0.71192
0.87418
1.12317
1.29072
0.71192
0.87418
1.12317
1.29072

Detrend
0.67562
0.81578
1.10451
1.34428
0.82903
0.83292
1.19910
1.30070
0.63247
0.94898
0.97421
1.36335

Deseason
28.0929
28.5981
31.1617
34.0895
39.3301
33.1738
38.2844
37.1885
33.7115
42.3252
34.7231
43.3866

Predict
21.0746
26.7897
35.5915
42.2470
24.0447
30.4367
40.2773
47.6318
27.0148
34.0838
44.9631
53.0167

Error
-1.07458
-1.78966
-0.59146
1.75302
3.95531
-1.43672
2.72271
0.36818
-3.01481
2.91621
-5.96313
2.98334

Time Series Decomposition Plot for Sales

MultiplicativeModel
60

Variable
Actual
Fits
Trend

Sales

50

AccuracyMeasures
MAPE
7.12046
MAD
2.38076
MSD
7.92420

40

30

20
1

6
7
Index

10

11

12

Component Analysis for Sales

MultiplicativeModel
Original Data

Detrended Data
3
Detr. Data

Data

50
40
30
20

-3
-6

6
I ndex

10

12

Seasonally Adjusted Data

50
40
30
20
2

6
I ndex

10

12

Seas. Adj. and Detr. Data

Seas. Adj. Data

6
I ndex

10

12

Seasonally Adj. and Detrended Data

3
0
-3
-6
2

6
I ndex

10

12

Seasonal Analysis for Sales

MultiplicativeModel
SeasonalIndices

Detrended Data, by Seasonal Period

1.2

1.2

1.0
0.9
0.8
1

0.6

Percent Variation, by Seasonal Period

Residuals, by Seasonal Period

5

30
0

20
10

-5
0