In order to increase the responsiveness of a forecast made using the moving-average method,the number of values in the average should be:
A)decreased
B)increased
C)multiplied by a larger $\alpha$
D)multiplied by a smaller $\alpha$
E)None of the above

Question

In order to increase the responsiveness of a forecast made using the moving-average method,the number of values in the average should be:
A)decreased 
B)increased 
C)multiplied by a larger $\alpha$
D)multiplied by a smaller $\alpha$ 
E)None of the above

Quizplus · Accepted Answer

The moving-average method relies on averaging a specific number of past values to make a forecast. By decreasing the number of values in the average, we put more emphasis on the more recent observations, making the forecast more responsive to recent changes in the data. Therefore, decreasing the number of values in the average is the best choice to increase the responsiveness of a forecast made using the moving-average method.

In Order to Increase the Responsiveness of a Forecast Made α\alphaα

In Order to Increase the Responsiveness of a Forecast Made $\alpha$