Using a 3-month moving average forecast, what of the following is not correct based on the demand table below?
$$\begin{array} { c l l l l l l l l l l l l }
\text { Month } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 & 11 & 12 \
\hline \text { Actual Demands } & 120 & 130 & 70 & 10 & 5 & 15 & 25 & 7 & 50 & 70 & 80 & 160
\end{array}$$
1)The MAD value is 5.02
2)The forecast tends to overestimate the demands (higher forecasts)
3)The Bias value is -1.48
4)At least 5 months' worth of data is needed to initialize a forecast
A) (1) and (4)
B) (2)
C) (1), (2) and (4)
D) (4)

Question

Using a 3-month moving average forecast, what of the following is not correct based on the demand table below?
$$\begin{array} { c l l l l l l l l l l l l } 
\text { Month } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 & 11 & 12 \
\hline \text { Actual Demands } & 120 & 130 & 70 & 10 & 5 & 15 & 25 & 7 & 50 & 70 & 80 & 160
\end{array}$$
1)The MAD value is 5.02
2)The forecast tends to overestimate the demands (higher forecasts)
3)The Bias value is -1.48
4)At least 5 months' worth of data is needed to initialize a forecast
A) (1) and (4)
B) (2)
C) (1), (2) and (4)
D) (4)

Quizplus · Accepted Answer

A 3-month moving average forecast uses the actual demands of the three previous months to predict the next month's demand. Therefore, it only requires data from the first three months to start making forecasts for the fourth month, not five months. The statements about MAD value, forecast tendency, and Bias value cannot be directly verified without calculations, but the initialization requirement is clearly incorrect based on the method described.

Using a 3-Month Moving Average Forecast, What of the Following