Suppose That You Are Using the Four-Period Simple Moving Average

question 52

Multiple Choice

Suppose that you are using the four-period simple moving average method to forecast sales, and sales have been decreasing by 10% every period. How will your forecasts perform?

• A) Forecasts will be lower than actual.
• B) Forecasts will be higher than actual.
• C) Forecasts will equal actual.
• D) Forecasts will be increasing.
• E) Forecasts will be decreasing by 2.5% every period.