The Boxer Company has been in business since 1998.The following sales data are recorded by quarter for the years 1999-2001. 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 1999-2001.  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 the moving average value. This involves dividing each observation by the corresponding moving average value, which removes the trend component of the time series. This is necessary in order to isolate the seasonal and random components, which can then be used to calculate the seasonal indexes.

The Boxer Company Has Been in Business Since 1998