A company wants to forecast demand using the simple moving average.The company uses four positive prior yearly (2013, 2014, 2105 and 2016) sales values.All yearly sales figures are unique (no repetitions).Which of the following is most accurate about the moving average forecast for year 2017?
A)Has to be smaller than at least one of the four yearly sales figures.
B)Has to be larger than at least one of the four yearly sales figures.
C)Has to be between the smallest and largest yearly sales figures.
D)Has to greater than all four yearly sales figures.
E)A, B and C only

Question

Quizplus · Accepted Answer

The simple moving average forecast for year 2017 will be the average of the four prior yearly sales figures.

A) It is possible that the moving average forecast for 2017 is smaller than one of the four yearly sales figures, especially if there was a significant increase in sales in one of the years. Therefore, option A is not accurate.

B) Similarly, it is possible that the moving average forecast for 2017 is larger than one of the four yearly sales figures, especially if there was a significant decrease in sales in one of the years. Therefore, option B is not accurate.

C) The moving average forecast for 2017 will be between the smallest and largest yearly sales figures since it is an average of these four values. Therefore, option C is accurate.

D) The moving average forecast for 2017 cannot be greater than all four yearly sales figures since it is an average of these four values. Therefore, option D is not accurate.

E) Since options A, B, and C are accurate, the best choice is E.

A Company Wants to Forecast Demand Using the Simple Moving