G - (pg 321-323 Simple moving average used when demand is...

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(pg. 321-323) Simple moving average: used when demand is not growing or declining or have seasonal characteristics. Shorter time span produces more oscillation but there is a closer following of the trend Longer time span gives a smoother response but lags the trend. Main disadvantage of this technique is that all individual elements must be carried as data because a new forecast period involves adding new data and dropping the earliest data. Weighted Moving average: allows any weights to be placed on each element--sum of all weights must equal 1 it is better than the simple moving average because it is able to vary the effects of past data. disadvantage: need to carry a large amount of historical data (like simple weighed method) Exponential smoothing: using alpha to decrease each increment in the past this technique is well accepted for 6 reasons: Surprisingly accurate Relatively easy understandable to user Simple-little computation is required to use the model
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This note was uploaded on 11/04/2011 for the course BUS 361 taught by Professor Stuff during the Fall '11 term at BYU.

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G - (pg 321-323 Simple moving average used when demand is...

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