CPIM Practice Exam

If the average demand for all quarters is 220 units, what is the first quarter seasonal index if the first-quarter results are 150, 175, and 200 units?

1. 0.682

2. 0.795

3. 0.909

4. 1.257

The correct answer is: 0.795

To determine the first quarter's seasonal index, you first calculate the average demand for the first quarter based on the provided results. The values given for the first quarter are 150, 175, and 200 units. 1. Calculate the average for the first quarter: \[ \text{Average for Q1} = \frac{150 + 175 + 200}{3} = \frac{525}{3} = 175 \text{ units} \] 2. The average demand for all quarters is given as 220 units. 3. The seasonal index for the first quarter can be calculated using the formula: \[ \text{Seasonal Index} = \frac{\text{Average for Q1}}{\text{Average Demand for All Quarters}} \] Substituting the values: \[ \text{Seasonal Index} = \frac{175}{220} \approx 0.795 \] This calculation shows that the first quarter's seasonal index is approximately 0.795, which indicates that demand in the first quarter is about 79.5% of the average demand across all quarters. Seasonal indices are useful for understanding how