472 Statistical Methods5 Click OK.
Excel generates the adjusted sales values shown in Figure 11-29.Figure 11-29
Liquor sales
adjusted for
seasonal effects
observed
valuesadjusted
valuesplot of observed and
adjusted valuesmultiplicative seasonal
indicesThe observed production levels are shown in column B, and the season-
ally adjusted values are shown in column C. Using the adjusted values can
give you some insight into the changing sales values adjusted for seasonal
effects. For example, between observations 4 and 5 the sales value increases
by 160 units (representing an increase of $160 million); however, when ad-
justed for the seasonal effects, the increase in sales is about $3 million. In
other words, when adjusting for the effects of seasonal variation, the sales in-
creased that month by $3 million over what would be expected in a usual year.
You can get some idea of the relative sales for different months of the year
from the table of seasonal indexes. For example, the seasonal index for June is
1.002 and for July it is 1.040. This indicates that you can expect a percentage
increase in liquor sales of^1 1.040 2 1.002^2 /1.002 5 0.037546, or about
3.75%, going from June to July each year. Seasonal indexes for the multipli-
cative model must add up to the length of the period, in this case 12. You can
use this information to tell you that 11.64% of the liquor sales take place in
December (because 1.397/ 125 0.1164). A line plot of the seasonal indexes