Journal of Applied Mathematics and Decision Sciences
Volume 8 (2004), Issue 2, Pages 87-105
doi:10.1155/S1173912604000069
Comparison of efficient seasonal indexes
Management Science and Information Systems Department, University of Massachusetts, Boston 02125-3393, MA , USA
Copyright © 2004 Peter T. Ittig. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
Estimates of a seasonal index in the standard manner (from a moving average)
introduce systematic error into the seasonal estimates if a trend is present. This
paper shows that a logarithmic modification of the standard moving average procedure
will cause it to be consistent with a trend and is an efficient alternative. This paper
also compares several other efficient seasonal indexing procedures appropriate for routine
business applications and shows some numerical results. The results indicate that
it is possible to achieve an improvement in the precision of the seasonal index, in the
seasonally adjusted data and in forecasts based upon this data, by considering logarithmic
alternatives to standard seasonal indexing procedures. This improvement may be
accomplished without a substantial increase in complexity or in the associated computational
burden. The opportunities for improvement are shown to be greatest when the
data contain substantial trend and seasonal aspects and when the trend has a percentage
form. Some suggestions for forecasters are offered.