If the company forecasts total annual sales of $1,000,000 next year, the average quarterly sales would be $250,000. However, using the index, the forecast for Q2 would be: $$ $250,000 \times \frac140100 = $350,000 $$ Without the index, the company would have underestimated Q2 demand by $100,000.
Index values above 1.00 indicate demand higher than the annual average. seasonal index