Forecasting using Moving Averages



Forecasting using Moving Averages

Solution

Day

Demand

1

200

2

134

3

157

4

165

5

177

6

125

7

146

8

150

9

182

10

197

11

136

12

163

13

157

14

169

Forecast using 3 year moving average

The basic assumption underlying forecasting using moving average method is that next period will be no different from the previous period (Hwa, 2007). Let us assume that it is the end of the 2nd week. Usually the forecasting is for the next day in sequence which in this case is the day 15. Using 3 year moving average, the demand for the next day will be calculated from the demand of previous 3 days. The formula for calculating the moving average is

Moving average = day ...