- This topic has 6 replies, 2 voices, and was last updated 4 years ago by
.
- Posts
sir was practising full question before going on the exam kit so that I have a better understanding of the moving averages
illustration from the Kaplan book:( I haven’t pasted the whole solution because it would be too long also I just need to ask till here only )
A business is forecasting the value of its sales for the first quarter of
the coming year. Current year values to date are as follows:
Month Sales value
June 851
July 771
August 916
September 935
October 855
November 1,000
December 1,019
Required:
Using moving averages calculate the forecast sales values for January
to March.
Solution:
Step 1 – calculate the 3 months moving average total
Month Sales value$ Moving average total$
June 851
July 771 2,538
August 916 2,622
September 935 2,706
October 855 2,790
November 1,000 2,874
December 1,019
Step 2 – calculate the trend by dividing the 3-month moving average
total by 3 to get the average for the 3 months.
Month Sales value$ Moving average total$ Trend$
June 851
July 771 2,538 846
August 916 2,622 874
September 935 2,706 902
October 855 2,790 930
November 1,000 2,874 958
December 1,019sir here I don’t understand one thing that here in the moving average total column they have just done the total of 3 months but in lecture, you told to take average divide by 3 and here it is different
can you tell why it is different here?
bare me with the format of the question is not coming exactly which way i typed
In the lectures I do not divide by 3. I divide by 4 because the sales per given per quarter of a year and there are 4 quarters in a year.
Here they are dividing by 3 because there are 3 months in a quarter of a year.
yes, sir, my point is in the lecture while calculating the moving averages you divided by 4 but here in step 1 only they haven’t divided by 3 just total the 3 months but in lectures, you divided by 4 in the first step only while calculating averages.
in this in the next step when they divided the total of 3 months they named it as trend. but this was not when you taught in the lecutres that first we need to divide and calculate the average then from the average we further took average which was centered average
It does all look very strange. What they seem to have done is calculated the average monthly sales. However if the seasonality is occurring quarterly then what they have arrived at is not the trend and they should then have calculated the average quarterly sales.
I do not have the Kaplan book (only the BPP Revision Kit) and so I cannot check exactly what they were intending to do.
(And this is nothing like the sort of questions that are asked in the exam. For exam questions what I show in my lectures is what is needed, and it is better to practice questions in the Exam Kit than in the Study Text because the Exam Kit contains exam standard questions.)
sir I share with you the link for the Kaplan book can you look at and what they intend to do, i am practising study text full questions for full understanding and now it got me stuck here
sir, please use this link for the book page number is 354 illustration 4 of chapter 12 forecasting techniques.
I will surely do the exam kit but just to get a better understanding of the full question I was practising from the study text.
please look at it click on the link above
There is no logic in what they have done. It would only make any sense of the variations were occurring monthly in three month cycles, but nothing in the example suggests that this is the case.
I have deleted the link that you posted, because the website is illegal. Sharing soft copies of copyright material is both illegal and is against ACCA regulations.
- The topic ‘moving averages’ is closed to new replies.