Question

Actual demand for a product for the past three months was: Three months ago400 units Two months ago350 units Last month325 units a. Using a simple three-month moving average, make a forecast for this month. (Round your answer to the nearest whole number.) Forecast for this month 358 correct units b. If 300 units were actually demanded this month, what would your forecast be for next month, again using a 3-month moving average

Answer 1

a. Forecast is 358

b. Forecast is 325

Step-by-step explanation:

a. Simple moving average is calculated as ;

= (N1 + N2 + N3) / N

Where N1 , N2, N3 are prices of instruments, while N is total period or time

Since

N1 = 400

N2 = 350

N3 = 325

Total periods = 3

Therefore,

Simple moving average = (400 + 350 + 325) / 3

= 1,075 / 3

= 358.333

We can forecast demand to be 358 using the simple moving average

b. If 300 units were actually demanded for this month, then;

Simple three moving average would be

N1 = 350

N2 = 325

N3 = 300

Total periods = 3

Since simple moving average = (N1 + N2 + N3) /3

= (350 + 325 + 300) / 3

= 975 / 3

= 325.

We can forecast the demand to be 325 this month , using a simple moving average.