"Now divide that total by 4 to get the 'average season' for next year," Leo said.
"Yes," Leo smiled. "An index of 1.0 means 'exactly average.' Below 1.0 is low season. Above 1.0 is high season." "Now you can predict next year," Leo said. "First, forecast your total sales for next year using a simple trend—say, you expect 10% growth because you're adding outdoor seating." how to calculate seasonal variation
| Year | Season | Sales (USD) | | :--- | :--- | :--- | | Year 1 | Summer | $60,000 | | Year 1 | Fall | $20,000 | | Year 1 | Winter | $10,000 | | Year 1 | Spring | $30,000 | | Year 2 | Summer | $70,000 | | Year 2 | Fall | $25,000 | | Year 2 | Winter | $12,000 | | Year 2 | Spring | $35,000 | "Now divide that total by 4 to get
One rainy Tuesday in March, her cousin Leo, a data analyst visiting from the city, saw her frantically scribbling inventory notes on a napkin. Above 1
Her profit margin increased by 18% not because she sold more ice cream, but because she stopped buying for summer in winter.
And every year, she recalculated the indices using the latest three years of data, because seasons shift. A new boardwalk hotel opened, boosting spring sales. Her Spring Index crept up from 0.99 to 1.10.