The Boxer Company has been in business since 1998.The following sales data are recorded by quarter for the years 2010-2012. The managers at the company wish to determine the seasonal indexes for each quarter during the year.The first step in the process is to remove the seasonal and random components.To do this,they will begin by computing a four-period moving average.They then compute the centered moving average.What is the next step in applying the multiplicative model?
A)Compute the grand mean
B)Divide the centered moving average by the forecasted value
C)Compute the ratio-to-moving average value
D)Normalize the data

Question

The Boxer Company has been in business since 1998.The following sales data are recorded by quarter for the years 2010-2012.  The managers at the company wish to determine the seasonal indexes for each quarter during the year.The first step in the process is to remove the seasonal and random components.To do this,they will begin by computing a four-period moving average.They then compute the centered moving average.What is the next step in applying the multiplicative model?
A)Compute the grand mean 
B)Divide the centered moving average by the forecasted value 
C)Compute the ratio-to-moving average value 
D)Normalize the data

Quizplus · Accepted Answer

The next step in applying the multiplicative model is to compute the ratio-to-moving average value. This is done by dividing the actual sales for each period by the centered moving average for that period. This step is necessary to remove the effect of the trend and enable the calculation of seasonal indexes. Once the ratio-to-moving average value is obtained, the seasonal indexes can be calculated by averaging the ratio-to-moving average values for each quarter over the entire period.

The Boxer Company Has Been in Business Since 1998