Suppose that you are using the four-period simple moving average method to forecast sales, and sales have been increasing by 40% every period. How will your forecasts perform?
a) Forecasts will be increasing by 40.0% every period.
b) Forecasts will be higher than actual.
c) Forecasts will equal actual.
d) Forecasts will be decreasing.
e) Forecasts will be increasing by 10.0% every period.
Answer: a) Forecasts will be increasing by 40.0% every period.