Seasonality Index

Categories: Operation and Production,

—consists of a number for each specific forecast period that describes the relationship of each period’s demand to the average demand (level) over the complete seasonal cycle. A seasonality index is used to adjust the forecast to account for these cyclical changes in demand. The average demand is represented by the number “1”. If seasonality for a period results in demand greater than the average demand, it will be represented by a number greater than 1. For example, if December’s sales were, on average, 30% greater than the average monthly sales for the year, you would have a seasonality index of 1.3 ( 1 plus .30) for December. If January’s sales were, on average, 20% less than the average monthly sales for the year, you would have a seasonality index of 0.8 (1 minus .20).