Question

A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values (i.e., year 2002 = 100, year 2003 = 120, year 2004 =140, and year 2005=210), which of the following is the simple moving average forecast for year 2006?

Answer 1

Answer:142.5

Explanation:

The simple average makes use of the average of the data given to predict the following year given.

The moving average forcast for 2006 it the mean or average of the data for year 2002 to 2005 which is 142.5

Answer 2

Answer:

142.5

Explanation:

To determine the price forecast for year 2006 we must find the average price for the prior four years:

price forecast for 2006 = (100 + 120 + 140 + 210) / 4 = 570 / 4 = 142.5

The simple moving average (SMA) is just the average price for the previous years.