Increasing the number of periods in a moving average will accomplish greater smoothing, but at the expense of
A) manager understanding
B) accuracy
C) stability
D) responsiveness to changes
E) All of the above are diminished when the number of periods increases.

Question

Quizplus · Accepted Answer

Increasing the number of periods in a moving average will lead to greater smoothing, but it will slow down the responsiveness to changes in the data, i.e., it will decrease the accuracy and stability of the forecast. The manager understanding may not be affected by the number of periods used in the moving average. Hence, option D is the best choice.

Increasing the Number of Periods in a Moving Average Will