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Calculate Moving Average
The table given below represents company sales; calculate 3 and 6 monthly moving averages, for data
Months
Sales
January
1200
February
1280
March
1310
April
1270
May
1190
June
1290
July
1410
August
1360
September
1430
October
November
December
1390
Solution
These are calculated as given below:
April's forecast = (Jan + Feb + Mar)/3 = (1200 + 1280 + 1310)/3
May's forecast = (Feb + Mar + Apr )/3 = (1280 + 1310 + 1270)/3
And so on...
Similarly for 6 monthly moving average
July forecast = (Jan + Feb + Mar + Apr + Jun)/6
= (1200 + 1280 + 1310 + 1270 + 1190 + 1290)/6
3 months moving average
6 months moving average
1263
1287
1257
1250
1297
1292
1353
1305
1400
1325
1357
1327
1373
1363
Note:
While plotting moving average on graphs the points are plotted as the midpoint of the period of the average, for illustration in our example the forecast for April (1263) is plotted on mid Feb.
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