MEASUREMENT OF SEASONAL VARIATIONS
Seasonal variations are those rhythmic changes in the time series data that occur regularly each year. They have their origin in climatic or institutional factors that affect either supply or demand or both. It is important that these variations be measured accurately for three reasons. First, the investigator wants to eliminate seasonal variations from the data he is studying. Second, a precise knowledge of the seasonal pattern aid in planning future operations. Lastly, complete knowledge of seasonal variations is of use to those who are trying to remove the cause of seasonals or are attempting to mitigate the problem by diversification, off setting opposing seasonal patterns, or some other means.
Since the number of calender days and working days vary from month to month, therefore, it is essential to adjust the monthly figures if the same are based on daily quantities, otherwise, there is no need for such adjustment when we deal with either volume of inventories or of bank deposits because then the values are not influenced by the number of calender days or working days.
Methods of Measuring Seasonal Variations
1. Method of Simple Averages (Weekly, Monthly or Quarterly).
2. Ratio-to-Trend Method.
3. Ratio-to-Moving Average Method.
4. Link Relatives Method.