Interaction of Time Series Components:

Any of the two time-series models can be used.

Additive Model

The actual demand is considered to be the sum of each of the components

Y = (T + C + S + R) /Pattern Noise

All of the components have to be expressed in the same units. The supposition of additivity, however, creates practical problems.

Multiplicative Model

The real demand is expressed as the product of the time-series components.

Y =   T . C . S . R /Pattern Noise

The demand is expressed in physical units or Rupees for the trend value, and the effects of cyclic, seasonal, and random components are expressed as percentage.