Question

Demand for a certain product is forecast to be 800 units per month, averaged over all 12 months of the year. The product follows a seasonal pattern, for which the January monthly index is 0.8. What is the seasonally-adjusted sales forecast for January?

a. 801.25 units
b. 83.33 units
c. 640 units
d. 798.75 units
e. 1000 units

Answer 1

Demand in January will be 640 units

So option (C) will be the correct option

Step-by-step explanation:

We have given average demand for a particular product is 800 units

And seasonal index = 0.8

We have to find the demand in a particular session , that is in January

We know that seasonal index is given by

`Seasonal\ index=(demand\ in\ a\ particular\ season)/(average\ demand)`

So
`0.8=(demand\ in\ January)/(800)`

So demand in January = 640

So option (c) will be the correct option