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

Answer:

Option A) Approximate seasonal index for July is 0.684

Step-by-step explanation:

We are given the following in the question:

The three previous July demand values:

110, 150, 130

The average demand over all months during the three-year time period = 190

$\text{Average} = \displaystyle\frac{\text{Sum of all observations}}{\text{Total number of observation}}$

Average July Demand for previous three years =

$= \displaystyle\frac{110+150+130}{3} = 130$

Seasonal Index for July =

$\displaystyle\frac{\text{Average July Demand for previous three years}}{\text{Average Demand Over All Month}}$

$\text{Seasonal Index for July} = \displaystyle\frac{130}{190} = 0.684211 \approx 0.684$

Thus, approximate seasonal index for July is 0.684