Impediments in time series analysis
Accuracy of data in reflecting
a) Drastic changes for illustration in the advent of a major competitor, period of war or unexpected change of taste.
b) For long term forecasting external and internal pressures makes historical data less effective.
Periodical data for illustration monthly sales may have random fluctuation each month despite a common trend being evident. Moving average assists in smoothing away these random changes.
A moving average is the forecast for a period which takes the average of the previous periods.