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 these are diminished when the number of periods increases.

Question

Quizplus · Accepted Answer

Increasing the number of periods in a moving average will increase the smoothing and reduce the impact of short-term fluctuations, but it will also reduce sensitivity to real changes in the data. This means that it may not respond adequately to sudden changes or outliers, which can affect the accuracy of the forecast. The other options (manager understanding, stability) are not necessarily affected by the number of periods in the moving average.

Increasing the Number of Periods in a Moving Average Will