Question

A seasonal index is being calculated on the basis of three years' accumulation of data in preparation for the summer forecast of Stand Up Paddle (SUP) boards. The three previous July values were 180,165 , and 190 . The average demand over all months of the year is 130 . What seasonal index would you utilize to estimate the forecast for the upcoming July?

a.0.29
b.1.74
c.0.62
d.1.37

Answer 1

To estimate the forecast for the upcoming July, the seasonal index can be calculated. The seasonal index is obtained by dividing the average demand for July over the three years by the average demand over all months. In this case, the seasonal index is approximately 1.37.

Step-by-step explanation:

To calculate the seasonal index for the upcoming July, we need to find the average demand for July over the three years. The average is calculated by adding up the demand for each July and dividing by 3:

(180 + 165 + 190) / 3 = 535 / 3 = 178.33

Next, we divide the average demand for July by the average demand over all months (130) to get the seasonal index:

178.33 / 130 = 1.37

Therefore, the seasonal index to estimate the forecast for the upcoming July is approximately 1.37.