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)sensitivity to real changes in the data.
E)All of the above are diminished when the number of periods increases.

Question

Quizplus · Accepted Answer

As the number of periods in a moving average increases, the smoothing effect also increases, but this comes at the expense of sensitivity to real changes in the data. In other words, the moving average becomes less responsive to sudden changes in the data when the number of periods is increased. This makes it less accurate and less stable, but it does not affect the manager's understanding of the data. Therefore, option D is the best choice.

Increasing the Number of Periods in a Moving Average Will