management science topics about simple moving average

1. SIMPLE MOVING
AVERAGES

2. SIMPLE MOVING AVERAGES
- IS THE UN-WEIGHTED
AVERAGE OF CONSECUTIVE
NUMBER DATA POINTS.
- IT IS A FORECASTING
METHOD SIMPLY ELIMINATES
THE EFFECTS OF SEASONAL,
CYCLICAL AND ERRATIC
FLUCTUATIONS BY GETTING
THE HISTORICAL DATA.

3. FORMULA
 SIMPLE MOVING AVERAGE =
∑ (MOST RESCENT n DATA
VALUES)
NUMBER OF TIME
PERIODS

4. EXAMPLE
 THE SALES (IN 000S OF UNITS)
OF PRODUCT WERE MINITORED
OVER 10- MONTH PERIOD; THE
RESULTS ARE SHOWN IN THE
TABLE . FIND THE THREE-
MONTH AND FOUR-MONTH
MOVING AVERAGES. GRAPH
THE DATA AND GIVE COMMENTS
ON THE RESULT

5. MONTH FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV
SALES 230 240 250 266 246 235 284 297 301 314

6. SOLUTION
 COMPUTATION FOR THE FORECAST
ON 3-MONTH MOVING AVERAGE
TO COMPUTE FOR THE
DEMAND FORECAST ON THE
MONTH OF MAY , WE WILL
INCLUDE THE MONTHS PRIOR
TO THE MONTH OF MAY. SO WE
WILL ONLY INCLUDETHE
MONTH OF FEBRUARY, MARCH
AND APRIL

7.  MAY=
 JUN=
 JUL=
 AUG=
230+240+250 720
3 3
= =240
240+250+266 756
3 3
= 252=
250+266+246 762
3 3254= =
266+246+235 747
3 3
= = 249

8.  SEPT=
 OCT=
 NOV=
 DEC =
246+235+284 765
3 3
= =255
235+284+297 816
3 3
= 272=
284+297+301 882
3 3294= =
297+301+314 912
3 3
= = 304

9. COMPUTATION FOR THE
FORECAST ON 4-MONTH
MOVING AVERAGE
JUNE
230+240+250+266
4
= 986/4 = 246.5
JULY
240+250+266+246
4
= 1002/4 =250.5
AUGUST
250+266+246+235
4
= 997/4 =249.25

10. SEPT 266+246+235+284
4
= 1031/4 = 257.75
OCT 246+235+284+297
4
= 1062/4 = 265.5
NOV 235+284+297+301
4
= 1117/4 = 279.25
DEC 284+297+301+314
4
= 1196/4 =299

11. THREE and FOUR-month MOVING AVERAGES
PERIOD MONTH ACTUAL
DEMAND
3- MONTH MOVING
AVE.
4-MONTH
MOVING AVE
1 FEB 230 __ __
2 MAR 240 __ __
3 APR 250 __ __
4 MAY 266 240 __
5 JUNE 246 252 246.5
6 JULY 235 254 250.5
7 AUG 284 249 249.25
8 SEPT 297 255 257.75
9 OCT 301 272 265.5
10 NOV 314 294 279.25
11 DEC __ 304 299