Question

In order to increase the responsiveness of a forecast made using the moving average technique, the number of data points in the average should be:

1) Multiplied by a smaller alpha
2) Increased
3) Decreased
4) Divided by alpha
5) Multiplied by a larger alpha

Answer 1

To increase the responsiveness of a forecast made using the moving average technique, the number of data points in the average should be increased. Therefore, the correct option is 2) Increased.

Step-by-step explanation:

The number of data points in the average should be increased in order to increase the responsiveness of a forecast made using the moving average technique. Increasing the number of data points in the average will provide a smoother average that captures more of the underlying trend and reduces the impact of individual data points. This helps to reduce fluctuations and noise in the forecast.