Question

A seasonal index for a monthly series is about to be calculated on the basis of three years' accumulation of data. The three previous December values were 120, 130, and 170. The average demand over all months during the three-year time period was 150. What is the seasonal index for December? Show your work and answer the question

Answer 1

The seasonal index for December is calculated by dividing the average December demand over three years by the overall average monthly demand, yielding a seasonal index of 93.33.

Step-by-step explanation:

Calculating the Seasonal Index for December

To calculate the seasonal index for December using the three years' accumulation of data, we will average the three previous December values and then compare this average to the overall average demand across all months. We calculate the December average as follows:

• Sum of December values (120 + 130 + 170) = 420
• Average December value = Total December value / 3 years = 420 / 3 = 140

The overall average monthly demand during the three-year period is given as 150. To calculate the seasonal index for December, we divide the average December demand by the overall average demand and then multiply by 100:

Seasonal index for December = (Average December value / Overall average demand) * 100
= (140 / 150) * 100
= 93.33

Therefore, the seasonal index for December is 93.33.