Deseasonalizing Forecasts. Agenda:. Seasonality defined & seasonal adjustment methods Brainstorming Exercise Nuts and Bolts How It Works Seasonal adjustment example Exercise Summary Appendix A: Solution to Exercise. Seasonality.
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1. Weather (temperature, precipitation)
2. Calendar Events (religious or secular festivals)
3. Timing decisions (vacations, accounting periods)
Why make seasonal adjustments?
The purpose of finding seasonal indexes is to remove the seasonal effects from the time series
Four-step procedure for seasonal adjustments:
1. Calculate forecast for each demand values in the time series
2. For each demand value, calculate Demand/Forecast
3. Average the Demand/Forecast for months or quarters to get the seasonal index
4. Multiply the unadjusted forecast by the seasonal index to find adjusted forecast value
Calculate forecast for each demand values in the time series
Y= a + bx
(0.72+0.66+0.59+0.55)/4 = 0.63
99.9 * 0.63 = 62.7 (adjusted forecast)