Which of the following statements most accurately describes the outcome of using a simple moving average model to forecast demand that has a strong trend?
A)Using more periods in the moving average calculation will produce better forecasts.
B)Moving average models require less historical data than exponential smoothing models.
C)Moving averages must be weighted in order to accurately predict a trend.
D)Changes in forecasts produced by a moving average model will lag behind changes in demand.

Question

Quizplus · Accepted Answer

Simple moving average models are not very effective in forecasting demand with a strong trend because changes in forecasts produced by the model will always lag behind changes in the trend. This is because the moving average calculation is based solely on past data and does not incorporate any information about future trends. Therefore, the best choice is D. Choices A and B are not correct because using more periods in the moving average calculation or requiring less historical data does not address the issue of forecasting a trend. Choice C is also not correct because simple moving averages are already equally weighted and do not require additional weighting for trend prediction.

Which of the Following Statements Most Accurately Describes the Outcome