In determining monthly seasonal indexes,the first step is to construct a centered moving average with a period of
A)24 months
B)12 months
C)6 months
D)3 months

Question

Quizplus · Accepted Answer

A centered moving average with a period of 12 months is the best choice for determining monthly seasonal indexes because it accounts for seasonality that occurs within a year, as there are 12 months in a year. A 24-month moving average may filter out some seasonality, while a 3 or 6-month moving average may not capture the full seasonal pattern. Therefore, a 12-month moving average strikes a balance between capturing the seasonality and being too sensitive to short-term fluctuations.

In Determining Monthly Seasonal Indexes,the First Step Is to Construct