One technique of forecasting is called the moving average.In this method,rather than using last year's sales as the forecast ___________.
A)A simple average for the last two or four years is used
B)A smoothing technique is used to determine the forecast
C)A decomposition of the industry is used to average the sales
D)An average is calculated using the midpoint of the sales trend and then is computed by multiplying it by a beta coefficient to get the next year's forecast
E)None of these

Question

Quizplus · Accepted Answer

The moving average method is conceptually quite simple. Consider the forecast that next year's sales will be equal to this year's sales. Such a forecast might be subject to large error if there is much fluctuation in sales from one year to the next. To allow for such randomness, we might consider using some kind of average of recent values. For example, we might average the last two years' sales, the last three years' sales, the last five years' sales, or any number of other periods.

One Technique of Forecasting Is Called the Moving Average