Quarterly Moving Averages - BSAK Weebly



Quarterly Moving Averages

For some industries, particularly those with a seasonal element to their sales (e.g. Travel Agents, Greeting Cards, etc.), sales figures are often presented ‘Quarterly’ (every 3 months). With data in this format it is much more useful to use a 4 point rather than a 3 point Moving Average, in order to establish a trend in the figures.

Below is a copy of the recent sales performance for Fizzy Ltd., a soft drinks supplier in the UK. Your task is to analyse these statistics in order to make a prediction of sales for the remainder of 2003.

Extrapolation

(4 Quarter Moving Averages)

The procedure is similar to the St. Christopher’s example using a 3 year moving average, there are simply a couple of extra steps to add.

Establish the Trend

• Calculate the 4 Quarter Moving Totals for the data.

• Calculate the 4 Quarter Moving Averages (divide the totals by 4).

• Since these values are currently between Quarters, they need to be Centred. Add up the values above and below each quarter then divide by 2.

• Plot the centred valus on your graph; this indicates the Trend in Fizzy Ltd.’s sales figures.

Predict the Future

• Establish a Line of Best Fit to your Trend line.

• Extend the Line of Best Fit.

• Read off the predicted sales figures for the remaining quarters.

Variations from the Trend

• Calculate how far the trend Varies from the actual sales figures in each quarter (Actual – Centred Moving average).

• Calculate the Average Quarterly Variations (Total Variations for Q1 / No. of Variations; and so on for Q2,3&4).

Sales Prediction

Add on (or takeaway) the Quarterly Variation to the value read off your graph, this is your Predicted Sales figure.

|Year |Quarter |Sales (000) |4 Quarter Total |4Q Moving Average |Centred Moving Average |Seasonal |

| | | | | | |Variation |

|2008 |1 |116 | | | | |

|  |  |  | | | | |

|  |2 |122 | | | | |

|  |  |  |509 |127.25 | | |

|  |3 |145 | | |126.88 | |

|  |4 |126 | | | | |

|2009 |1 |113 | | | | |

|  |2 |124 | | | | |

|  |3 |163 | | | | |

|  |4 |122 | | | | |

|2010 |1 |125 | | | | |

|  |2 |134 | | | | |

|  |3 |181 | | | | |

|  |4 |127 | | | | |

|  |  |  | | | | |

|2011 |1 |135 | | | | |

|  |  |  | | | | |

|  |2 |  | | | | |

|  |  |  | | | | |

|  |3 |  | | | | |

|  |  |  | | | | |

|  |4 |  | | | | |

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