A retailer wants to forecast the sales of a product for the next six months based on the past three years of monthly sales data. Which time series forecasting model might be most appropriate given the presence of annual seasonality in the sales data?
- Exponential Smoothing
- ARIMA (AutoRegressive Integrated Moving Average)
- Linear Regression
- Moving Average
ARIMA is a suitable time series forecasting model when dealing with data that exhibits annual seasonality, as it can capture both the trend and seasonality components in the data. Exponential Smoothing, Linear Regression, and Moving Average are not as effective for modeling seasonal data.
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