Table 1 below contains four years of data from University of Phoenix Winter Historical Inventory Data.
Actual Demands (in units)
MonthYear 1Year 2Year 3Year 4
Table 1. University of Phoenix (UOPXX) Material - Winter Historical Inventory Data
The inventory data shows a trend across all for years of seasonal highs during the winter months, and severe dips mid-year in the summer months. Therefore, creating a seasonal index would be an appropriate way to show general trends in the data. A seasonal index attempts to “deseasonalize” the time series to see if the seasonality spikes masked other real trends (Arsham, 1994). The following displays the seasonal index calculations for the Winter Historical Data. To calculate the index, first find the moving average across spans of 12 months and then use the corresponding season index ratio to calculate how far the original month’s data differs from the 12-month average. Because the seasonal index ratio numbers did not all add up to exactly 12, it is necessary to scale the averages to make them correct, and the results are the Seasonal Index numbers below. Month-YearOriginal DataSeasIndex RatioSeasonal Index
Table 2. Seasonal Index calculations for UOPX Winter Historical Inventory Data
To see the differences between the index and the original inventory numbers, Graph 1 below shows the two sets of data graphed together.
Graph 1. Seasonal Index of UOPX Winter Historical Inventory Data with Original...