Moving Averages

Period Demand 4 Week Moving Average
1 100
2 150
3 230
4 180
5 300 165
6 320 215
7 290 257.5
8 160 272.5
9 180 267.5
10 140 237.5
11 200 192.5
12 210 170

Table 15: Four-Week Moving Average

Moving averages use a pre-determined number of periods and each time the forecast is re-calculated the oldest data is dropped from the calculation (becoming known then as lagged demand) and the latest data is included.

For example, using the data from Table 15 and in period 4 calculating the forecast using a 4 period moving average for period 5 would be:

(100+150+230+180) / 4 = 165

Doing the same calculation in period 5 to obtain the forecast for period 6 would result in the period 1 demand of 100 becoming lagged (dropped) and the period 5 demand of 300 being included:

(150+230+180+300) / 4 = 215

2020-03-05T14:46:12+00:00