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 July values were​ 110, 150, and 130. The average demand over all months during the​ three-year time period was 190. What is the approximate seasonal index for​ July?

A. 0.684
B. 2.053
C. 1.462
D. 0.487
E. cannot be calculated with the information given

Answer 1

A. 0.684

Step-by-step explanation:

A seasonal index refers to an index that is used to compare the value for a particular period with the average value of all periods.

The purpose of using a seasonal index is to show the relationship between the two values, and the degree to which the two values are different.

The seasonal index can be calculated as the latest value for a period divided by the average of all periods. Therefore, we have:

Seasonal index for July = Latest value for July / Average demand over all months = 130 / 190 = 0.684.

Therefore, he approximate seasonal index for​ July is 0.684.