Essentially Quantitative techniques uses numerical facts and historical (time series) data to predict furture projections.
Perhaps the simplest of all of the time series forecasting techniques is a moving average. To use this method, we calculate the average of, for example, three periods of actual demand and use that to forecast the next period’s demand.
If this three-period average is to be used as a forecast, it would have to forecast demand in a future period, such as Period Eight.
Because each average moves ahead one period each time, dropping the oldest value and adding the most recent, this procedure is called a moving average.
The number of periods to use in computing the average may be anything from two to 12 or more, with three or four periods being common.
If the time series is such that there is no upward or downward trend, then the moving average is a satisfactory technique. If, however, there is any trend or any seasonal effect, then the moving average will not work very well. Moving averages lag behind any trends.
