Index ^hot^ — Seasonal

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).

Now each index shows the seasonal effect relative to the overall average. Suppose quarterly sales (in $1,000) for two years:

(We’ll skip full arithmetic for brevity – but you’d smooth the data.) seasonal index

= Actual ÷ Seasonal Index.

[ \textActual = \textTrend \times \textSeasonal \times \textIrregular ] It is used to measure and remove seasonal

[ \textAdjusted Index_i = \frac\textRaw Index_i\textMean of Raw Indices ]

[ \textSeasonal Ratio = \frac\textActual Value\textCentered Moving Average ] seasonal index

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: