The way a seasonal index is computed involves which of the following steps?
A) Remove the effect of seasonal and random variation by regression analysis.
B) For each time period,compute the ratio,which removes most of the trend variation for that time period.
C) Calculate the average of all the ratios:over all time periods to remove random variation and leaving a measure of seasonality.
D) All of these choices are true.

Question

Quizplus · Accepted Answer

All three steps (A, B, and C) are involved in computing a seasonal index. Step A involves removing the effects of both seasonal and random variation using regression analysis. Step B involves calculating ratios for each time period that removes most of the trend variation. And step C involves using the average of all the ratios to remove any remaining random variation and leaving a measure of seasonality. Therefore, the correct answer is D, as all three steps are needed to compute a seasonal index.

The Way a Seasonal Index Is Computed Involves Which of the Following