Calculation
The measurement of seasonal variation by using the ratio-to-moving average method provides an index to measure the degree of the seasonal variation in a time series. The index is based on a mean of 100, with the degree of seasonality measured by variations away from the base. For example if we observe the hotel rentals in a winter resort, we find that the winter quarter index is 124. The value 124 indicates that 124 percent of the average quarterly rental occur in winter. If the hotel management records 1436 rentals for the whole of last year, then the average quarterly rental would be 359= (1436/4). As the winter-quarter index is 124, we estimate the number of winter rentals as follows:
359*(124/100)=445;
Here, 359 is the average quarterly rental. 124 is the winter-quarter index. 445 the seasonalized winter-quarter rental.
This method is also called the percentage moving average method. In this method, the original data values in the time-series are expressed as percentages of moving averages. The steps and the tabulations are given below.
Read more about this topic: Seasonality, Measuring Seasonality
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