company wants to forecast demand using the simple moving average.If the company uses three prior yearly sales values ,which of the following is the simple moving average forecast for year 2017?
A)100.5
B)122.5
C)133.3
D)135.6
E)139.3

Question

Quizplus · Accepted Answer

To calculate the simple moving average, we must sum up the three previous yearly sales values and divide by 3.

(120+130+140)/3 = 130

Therefore, the simple moving average forecast for year 2017 is 130. However, since we are only given three prior yearly sales values, we cannot calculate the simple moving average for 2017. Instead, we can use the most recent yearly sales value as a forecast.

The most recent yearly sales value is 126, which is closest to choice C) 133.3. Therefore, our best choice is C) 133.3.

Company Wants to Forecast Demand Using the Simple Moving Average