MA2 Managing Costs and Finance Forums › Multiplicative Model MA2 BPP book

[tovele]

Hi,

I´m analyzing an example where the average q1=0.975, q2=1.3035,q3=0.637 and q4= 1.0935 the total is 4.009/4=1.00225 but they use 0.00225 average to be deducted.

Note: Instead of summing to zero, as with addictive approach, the averages should sum(in this case) 4.0,1.0 for each of the four quarters.

Could someone help to understand why they´re using a different number?

Thanks is advance.

[Ken Garrett]

The avreage should not be 4. That’s the total. The average should be 1.

[tovele]

The sum of all quarters is 4.009 which will be divided by 4 to get the average which is 1.00225.

So my question is if the average is 1.00225 why they are using only 0.00225?

Note: Instead of summing to zero, as with addictive approach, the averages should sum(in this case) 4.0,1.0 for each of the four quarters. This is confusing me.

Thanks in advance

[Author]

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