EXAMPLE 13.17 Amazon Sales

CASE 13.1 Refer back to Figure 13.4 (page 648) showing a time plot of quarterly Amazon sales. We noted that sales is increasing at a greater rate over time. This implies the need for a nonlinear trend model. We also noted that the fourth-quarter seasonal surge increases over time. One explanation for this phenomenon is that the seasonal variation is proportional to the general level of sales. Consider, for example, that fourth-quarter sales are, on average, 40% greater than third-quarter sales. Even though the fourth-quarter percent increase remains fairly constant, the amount of increase in dollars will be greater and greater as the sales series grows.