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