Simple moving average for product 8 - Term Paper Example

SIMPLE MOVING AVERAGE FOR PRODUCT 8 Here Here SIMPLE MOVING AVERAGE FOR PRODUCT 8 The advantage of using simple moving average for weekly forecasting is that it is a simple calculation; one only needs to divide the average price over the chosen time period. The main advantage of the method is that it provides a smoothed line free from whipsawing fluctuation in response to the temporary price dynamic. Therefore, it offers a more sustaining level indicating resistance or support1. The product 8 records higher sales in 8d1 stores, followed by 8b1, while the worst performing are 8a1 and 8c1.

To run the simple moving average, the product classes will be divided into five product classes; 8a1, 8b1, 8c1, 8d1, and 8e1. Valuable information will need to be strategized based on the product name, store, product store id, sales, promotion, date, 3 weekly, and 4 weekly. The selected product data will be based on a long period of time. The strategy will be tested on the products rather than an individual product, for the reason that the representative products will be tested. Since the daily product data was not available, the three and the four week data will be used instead.

One advantage for the strategy is that the transaction cost will be reduced2. For product store 8a, the forecasting accuracy for 3 and 4 weekly are 7.6 and 6 respectively. Product 8b for 3 and 4 weekly are 13.67 and 15.5 respectively. Product 8c1 are 4.67 and 3.5 for 3 and 4 weekly respectively. For product 8d1, the forecasting accuracy for 3 and 4 weekly are 20.33 and 22.5 respectively, while the forecasting accuracy for 3 and 4 weekly are 4.667 and 5.75 respectively.ReferencesKlinker F, Exponential Moving Average Versus Moving Exponential Average (2010) 58 Mathematische SemesterberichteTong H, Fitting A Smooth Moving Average To Noisy Data (Corresp.) (1976) 22 IEEE Transactions on Information Theory