IIFT 2017 Question Paper Question 111

Instructions

Refer to the Table below. It provides quarterly output data of a company for four years (1998-2001) and its trend calculated through 4-quarter Moving Average Method:


Question 111

In which quarter, on an average there is maximum negative deviation of the output from the average value of trend of that quarter?

Solution

Quarters with negative deviation from its trend

Average deviation for any quarter  = Sum of all deviations from the quarter / Number of years

By observation, Quarter 1 will be rejected as all its deviations are positive.

Average deviation for quarter 2  =  ((63-64.5) + (59-61.12) + (55-55.25))/3 = (-1.5-2.12-0.25)/3 = -3.87/3

Average deviation for quarter 3  =  ((56-60.38) + (63-65.5) + (56-58))/3 = (-4.38-2.5-2)/3 = -8.88/3

Average deviation for quarter 4 =   ((61-61.38) + (67-65.25) + ( 52-56.25 ))/3 = (-0.38+1.75-4.25)/3 = -2.88/3

Quarter 3 has maximum average negative deviation.


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