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Hello,
in one particular question I have been given the sales volume for 9 months and asked to identify the monthly trend using a 5-point moving average. In the answer they simply substract the first 5-month average from the second 5-month average. Could you please explain why they are doing this? I would have found the average of the trend.
Thanks in advance!I would need to see the whole question to give you a full answer. If it is in the current edition of the BPP Revision Kit then tell me the number of the question.
However, if it is a 5-point moving average then we do not need to average again (for any odd number, the average will already coincide with an actual month). It is only when it is an even number – e.g. a 4-point moving average that we then need to centre the average.
With regard to the monthly trend, it could actually mean several things – it depends on the wording of the question.
The question is in the Kaplan revision kit, question Nr. 225:
A company is preparing its forecast sales information for the end of the current year. The actual sales information for the first 9 months of the current year is below:
Sales volume (units)
172100
149600
165800
182600
160100
197100
174600
190800
207600The sales volume trend is to be identified using a 5-month moving average. What is the monthly trend?
Answer: 5000 units, which is the monthly change in the trend, e.g 171040-166040
Month: Sales Volume (See above): Trend:
01
02
03 166040
04 171040
05 176040
06 181040
07 ……
08
09Well I have answered the bit about the 5 point average to get the trend.
As far as the monthly trend is concerned, because it asks for the sales volume monthly trend, then what they are after is the change from month to month in the trend.
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