Comments

  1. avatar says

    why didnt we find the next 4 moving average of the moving averages to find the Trend but rather find the average of 2 moving averages.
    If the trend find is to be plotted on a graph, the line is not perfectly straight, so can one continue to average the and if yes will it be average of 2 of the trend figures or what?. I realised that if the sales is averaged on every 4 sales basis throughout until two point are gotten, the line will be straight. Can it be done practically and academically?

    • Avatar of John Moffat says

      The 4 quarter moving average was to get the average sales per quarter.
      The only reason for centering it is because the middle quarter did not coincide with any one actual quarter. After centering it, we can then compare the actual sales in a quarter with the ‘average’ sales in the quarter.

      There would be no point in keep averaging. The only point is to average out the seasonality. In practice, the trend may be a smooth pattern (either linear or curved) and would be easier then to forecast than the actual sales which keep going up and down because of the seasonality.

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