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Give step-by-step solution with explanation and final answer: Topic: Forecasting - Moving Average Question: The demand for a product over the past 6 months was: 150, 160, 170, 165, 175, 180 units. Calculate a 3-month moving average forecast for month 7.

Question:

Give step-by-step solution with explanation and final answer: Topic: Forecasting - Moving Average Question: The demand for a product over the past 6 months was: 150, 160, 170, 165, 175, 180 units. Calculate a 3-month moving average forecast for month 7.

This is AI generated Response.
Asked by: chandu
Created at: 2026-03-07 01:01:50

Thought Process:

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**Calculating moving average forecast** I need to provide a step-by-step solution for the forecasting topic using the moving average. The demand data for months 1-6 is 150, 160, 170, 165, 175, 180. I want to calculate the 3-month moving average for month 7 using the last three months' data (months 4-6): 165, 175, and 180. Calculating the sum gives me 520, and dividing by 3 results in 173.33 units. I can round this as needed, possibly to 173 units.**Creating final answer for moving average** I think I should present the final answer as 173.33 units, noting that rounding is common to the nearest whole unit. It’s important to include a brief explanation of the moving average concept and to use a formula like MA3(t+1) = (D_t + D_{t-1} + D_{t-2})/3, where t refers to months 6, 5, and 4. I'll keep formatting light but include bullet points as necessary, since the user wants a step-by-step breakdown. Let’s finalize that!

Final Answer:

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Step-by-step solution: 1) Understand the method: - A 3-month moving average forecast uses the average of the most recent three months of actual demand to forecast the next month. 2) Identify the most recent 3 months (months 4–6): - Month 4: 165 - Month 5: 175 - Month 6: 180 3) Compute the average: - Sum = 165 + 175 + 180 = 520 - Average = 520 / 3 = 173.33... Explanation: - The 3-month moving average smooths out short-term fluctuations by averaging the latest three data points, making it a simple and commonly used forecasting method. Final answer: - The 3-month moving average forecast for month 7 is approximately 173.33 units (often rounded to 173 units).

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