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SEASONAL INDICES

A seasonal index is a measure of how a particular season compares
with the 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, January’s unemployment is 10% above average.
September’s unemployment is 15% less than average.
Deseasonalising is the process that is used to remove the seasonal
efects 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 fgures of Summer Year1 using the
data and seasonal indices tables below.
Solution: Deseasonalised data for ‘Summer 1’ = Summer 1 data =
920 = 9!
Summer seasonal inde"
1#0!
Calculating seasonal indices
E"am$le: Mikki runs a shop and she wishes to determine %uarterl&
seasonal indi'es
based on her last year’s sales, which are shown in the table below.
Solution: Using the above formula to fnd the seasonal index
seasonal inde" = (alue of t)e %uarter
%uarter a(era*e
Find the quarter average
%uarter a(era*e = 920 + 10, + 12-1 + --. = 92!
-
Find the seasonal index of each season
seasonal inde" Summer = 920 = 0#99/
92!
seasonal inde" Autumn = 10, = 1#1/.
92!
seasonal inde" 0inter = 12-1 = 1#!-,
92!
seasonal inde" S$rin* = --. = 0#-!
92!
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: 1)e seasonal a(era*e of &ear 1 2as found $re(iousl&
Find the quarter average for year 2
%uarter a(era*e &ear 2 = 10!, + 110 + 1!,. + ,-1 = 102
-
Find the seasonal index of each season
seasonal inde" Summer = 10!, = 1#00/
102
seasonal inde" Autumn = 110 = 1#1-
102
seasonal inde" 0inter = 1!,. = 1# !19
102
seasonal inde" S$rin* = ,-1 = 0#,2.
102
Find the quarter average for year 3
%uarter a(era*e &ear 2 = 1299 + 1!2- + 1-,0 + .,9 = 11!
-
Find the seasonal index of each season
seasonal inde" Summer = 1299 =1#09
11!
seasonal inde" Autumn = 1!2- = 1#119
11!
seasonal inde" 0inter = 1-,0 = 1#22.
11!
seasonal inde" S$rin* = .,9 = 0#,,/
11!
1o 3nd t)e seasonal indi'es of t)e ! &ears 2e need to 3nd t)e a(era*e
seasonal inde" of ea') season#
45ES1IONS
1 The table below shows the monthly sales fgures 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 frst, 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.
- 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 year’s 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.
, 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 year’s enrolment fgures. Complete the table by calculating the seasonal index for
spring and the deseasonalised student numbers for each course.
. The following table shows the monthly sales fgures 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 fgures
b The seasonal index for July is 0.90. Explain what this means in terms of the average
monthly sales.
ANS0E6S
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
!
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b In Quarter1therestaurantchainemploys30% more waiters than the number employed in
an average quarter.
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c In July the VMAX company records 10% fewer sales than in an average month.