CMA Intermediate · Operations Management and Strategic Management · Operations Planning
Kaveri Textiles uses a simple moving average of the last three months to forecast demand. Sales for the last three months were 420, 450 and 480 metres (thousands). What is the forecast for next month?
The three-month simple moving average equals (420 + 450 + 480) divided by 3, which is 1,350/3 = 450 thousand metres. This gives equal weight to each of the last three months, so the forecast is 450.
- A435
- B450Correct
- C480
- D465
Explanation
Three-month simple moving average = (420 + 450 + 480)/3 = 1,350/3 = 450. Choosing 480 uses only the latest month, and 435 averages only the first two months.
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