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Chapter 4: Q18-5OQ (page 476)

Question: The following table contains the number of complaints received in a department store for the first 6 months of operation:

MONTH
COMPLAINTS
January
36
February
45
March
81
MONTH
COMPLAINTS
April
90
May
108
June
144

If a three-month moving average is used to smooth this series, what would have been the forecast for May?

Short Answer

Expert verified

Answer

The forecast for the month of May is 72.

Step by step solution

01

Step-by-Step Solution Step 1: Definition of moving average

Amoving average is an indicator that market analysts and investors may use to work out the direction of a trend. It sums up the information points of financial security over a particular period of time and divides the entire by the number of data points to gain an average. it's called a “moving” average because it's continually recalculated supported by the newest price data

02

Explanation

Use the actual demand from February through April to develop May’s forecast:

Simplemovingaverage=A1+A2+..........+Ann45+81+903=72

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