Question

 

A store has the following demand figures for the last four years:

Year	Demand
1	100
2	150
3	98
4	112

With a three-year moving average, what is the demand forecast for year 4?

• 116
• 105
• 120
• 124

Answer 1

A three year moving average method averages the actual value for the previous three years to generate the forecast for the next year. This can be calculated as the sum of the actual value for the previous three years / 3

So using the above formula the forecast for year 4 is as follows : (year1 demand + year2 demand + year 3 demand) /3

=(100 + 150 + 98) / 3

= 348 / 3

= 116

So the answer is 116