1. What Is a Seasonal Index? A seasonal index (also called a seasonal component or seasonal factor) is a numerical value that quantifies how a particular time period (e.g., a month, quarter, or week) compares to the average period in a seasonal cycle. It is used to measure and remove seasonal variation – predictable, recurring fluctuations that happen within a fixed period (usually one year).
[ \textSeasonal Ratio = \frac\textActual Value\textCentered Moving Average ] seasonal index
| Year | Q1 | Q2 | Q3 | Q4 | |------|----|----|----|----| | 2022 | 80 | 120 | 100 | 140 | | 2023 | 90 | 130 | 110 | 150 | It is used to measure and remove seasonal
This ratio represents the combined effect of seasonality and random noise. Group all ratios by month (or quarter, etc.) and calculate the median or mean (median is less sensitive to outliers). Step 4: Adjust So That Average = 1 If the average of your raw seasonal indices is not exactly 1, adjust them: Step 4: Adjust So That Average = 1