Understanding Seasonal Indices in Time-Series Analysis

Consider a retail company that tracks its monthly sales over a 3-year period (36 months). The sales data exhibits a periodic pattern, showing peaks during the holiday season and troughs in the early months of the year. The company decides to use a seasonal decomposition approach to better understand these patterns.

When applying the classical seasonal decomposition methods, the company needs to account for multiplicative seasonality due to the interaction of seasonal factors and the overall sales volume. If the sales for January are affected by a seasonal index of 0.8, which implies that January sales are generally 20% lower than average, the company needs to adjust future predictions accordingly.

Given this context, which of the following statements regarding seasonal indices and time-series analysis is correct?