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average season.

Consider the monthly seasonal indices for unemployment given in the table

below:

Seasonal indices are calculated so that their average is 1. This means that

the sum of the seasonal indices equals the number of seasons. Thus, if the

seasons are months, the seasonal indices add to 12. If the seasons are quarters,

then the seasonal indices would add to 4, and so on. January has seasonal index

of 1.1which means, Januarys unemployment is 10% above average.

Septembers unemployment is 15% less than average.

Deseasonalising is the process that is used to remove the seasonal effects

from a set of data. This allows any underline trend to be made clearer.

We can use seasonal indices to deseasonalise time series. To calculate

deseasonalised data, each entry is divided by its seasonal index as follows.

Deseasonalising data

Example: Deseasonalise the quarterly sales gures of Summer Year1 using the

data and seasonal indices tables below.

Solution: Deseasonalised data for Summer 1 = Summer 1 data = 920 =

893

Summer seasonal index 1.03

Calculating seasonal indices

Example: Mikki runs a shop and she wishes to determine quarterl seasonal

indi!es

based on her last years sales, which are shown in the table below.

Solution: Using the above formula to find the seasonal index

seasonal index = "alue of t#e quarter

quarter a"era$e

Find the quarter average

quarter a"era$e = 920 % 108& % 12'1 % ''( = 923

'

Find the seasonal index of each season

seasonal index Summer = 920 = 0.99)

923

seasonal index *utumn = 108& = 1.1)(

923

seasonal index +inter = 12'1 = 1.3'&

923

seasonal index Sprin$ = ''( = 0.'83

923

Calculating seasonal indices (several years data)

Suppose that Mikki has in fact three years of data, as shown. Use the data to

calculate seasonal indices, correct to two decimal places.

Solution: ,#e seasonal a"era$e of ear 1 -as found pre"iousl

Find the quarter average for year 2

quarter a"era$e ear 2 = 103& % 1180 % 13&( % &'1 = 1028

'

Find the seasonal index of each season

seasonal index Summer = 103& = 1.00)

1028

seasonal index *utumn = 1180 = 1.1'8

1028

seasonal index +inter = 13&( = 1. 319

1028

seasonal index Sprin$ = &'1 = 0.&2(

1028

Find the quarter average for year 3

quarter a"era$e ear 2 = 1299 % 132' % 1'&0 % (&9 = 1183

'

Find the seasonal index of each season

seasonal index Summer = 1299 =1.098

1183

seasonal index *utumn = 132' = 1.119

1183

seasonal index +inter = 1'&0 = 1.22(

1183

seasonal index Sprin$ = (&9 = 0.&&)

1183

,o find t#e seasonal indi!es of t#e 3 ears -e need to find t#e a"era$e seasonal

index of ea!# season.

QUESTIONS

1 The table below shows the monthly sales gures and seasonal indices (for January to

November) for a product produced by the U-beaut company.

a Complete the table by calculating the missing seasonal index.

b Interpret the seasonal index for

i February

ii August

2 The table below shows the quarterly newspaper sales of a corner store for Year 1. Also

shown are the seasonal indices for newspaper sales for the rst, second and third quarters.

Complete the table.

3 Each of the following data sets records monthly sales ($000s). Use the data to determine

the seasonal indices for the 12 months. Give your results cor rect to two decimal places.

Check that your seasonal indices add to 12.

4 The number of waiters employed by a restaurant chain in each quarter of one year, along

with some seasonal indices which have been calculated from the previous years data, are

given in the following table.

a What is the seasonal index for the second quarter?

b The seasonal index for Quarter 1 is 1.30. Explain what this mean in terms of the average

quarterly number of waiters.

c Deseasonalise the data.

5 The following table shows the number of students enrolled in a 3-month computer systems

training course along with some seasonal indices which have been calculated from the

previous years enrolment gures. Complete the table by calculating the seasonal index for

spring and the deseasonalised student numbers for each course.

6 The following table shows the monthly sales gures and seasonal indices (for January to

December) for a product produced by the VMAX company.

a Complete the table by:

i calculating the missing seasonal index

ii evaluating the deseasonalised sales gures

b The seasonal index for July is 0.90. Explain what this means in terms of the average

monthly sales.

ANSWERS

1a 1.0

bi In general, in February, monthly sales are 30% more than in an average month.

Ii In general, in August, monthly sales are 30% less than in an average month.

2

3

4

b In Quarter1therestaurantchainemploys30% more waiters than the number employed in

an average quarter.

5

6

c In July the VMAX company records 10% fewer sales than in an average month.

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