Which term is a forecast based on averaging past demand?

Which term is a forecast based on averaging past demand?

• A. Market Share
• B. Moving Average
• C. Marketing Plan
• D. Marketing audit

Answer: (B)

Moving average is a forecast method that uses the average of past demand over a fixed number of periods to predict the next period. By summing the demand from the last n periods and dividing by n, you get a smoothed forecast that reduces random fluctuations and highlights the underlying pattern. This approach is especially useful when demand is fairly stable and there isn’t a strong trend or seasonal effect. For example, if the last three quarters sold 2,000, 2,300, and 2,100 units, the 3-period moving average forecast for the next quarter would be (2000 + 2300 + 2100) / 3 = 2,133 units. Be aware that if there’s a clear trend or seasonality, a simple moving average may be less accurate, so other methods like weighted moving averages or exponential smoothing can be more appropriate. Market share describes a company’s portion of the market, not a forecasting method. A marketing plan is a strategic document outlining actions, and a marketing audit is a review of marketing performance.

Moving average is a forecast method that uses the average of past demand over a fixed number of periods to predict the next period. By summing the demand from the last n periods and dividing by n, you get a smoothed forecast that reduces random fluctuations and highlights the underlying pattern. This approach is especially useful when demand is fairly stable and there isn’t a strong trend or seasonal effect.

For example, if the last three quarters sold 2,000, 2,300, and 2,100 units, the 3-period moving average forecast for the next quarter would be (2000 + 2300 + 2100) / 3 = 2,133 units.

Be aware that if there’s a clear trend or seasonality, a simple moving average may be less accurate, so other methods like weighted moving averages or exponential smoothing can be more appropriate.

Market share describes a company’s portion of the market, not a forecasting method. A marketing plan is a strategic document outlining actions, and a marketing audit is a review of marketing performance.