Calculate moving average, Mathematics

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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

1280

November

1410

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

And so on...

 

3 months moving average

6 months moving average

April

1263

 

May

1287

 

June

1257

 

July

1250

1257

August

1297

1292

September

1353

1305

October

1400

1325

November

1357

1327

December

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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