How Forecasting Method is Used – Moving Averages
There are many elements involved in accurate inventory forecasting and planning. Avercast uses different forecasting methods to ensure our forecasts are as accurate and reliable as possible. One of the methods used in Avercast’s forecasting software is the moving averages method.
Simply put, moving averages is what it sounds like. Averages are ‘moved’ to manipulate data and produce a reliable forecast. This can be done in a variety of ways, including simple and weighted moving averages.
Simple
Simple moving average forecasting is basically your typical type of averaging. You can average one period, or multiple periods.
For example, let’s say it’s the end of March, so your first sales quarter is almost over. To get the simple moving average (SMA) you would divide the total sales from January – March by the number of periods, which in this case would be 3 (because 3 months). This average can be used to forecast the sales of the upcoming months/period.
Weighted
The Weighted Moving Average (WMA) method is a bit more intricate than SMA as it involves assigning a range of percentages to different periods. These percentages are determined based on the relation of previous data to current market trends.
For example, let’s say due to economic changes, in the past 3 months the demand for your products has spiked. With years of experience, you know the demand is most likely to continue to increase over the next few months. With Avercast, you’re able to use the WMA method and assign the last 3 months a higher percentage than the rest of the past year.
By doing this, the forecast can use the most recent and relatable data to produce an accurate prediction of what the next period of demand will look like.
Moving Averages helps businesses that utilize it. As the market constantly changes, it’s important that you have access to methods that help you keep up with fluctuating demand. With Avercast, you have access to all the methods of forecasting you could ever need.
Avercast has been in the supply chain industry for over 40 years. In that time, we’ve secured our position as a leading forecasting software provider. Our experts have curated the most reliable Inventory forecasting software available today. They’ve implemented the different methods of forecasting to do so, including the moving averages method.
Could your inventory use some improvement? These improvements could be needed in a variety of areas including ordering, warehouse/storage, delivery, sales, and more. If you feel your inventory operations could be improved, you need Avercast.
Our experts would love to learn more about your specific needs and chat with you about how you can see more success with Avercast. Sign up for a free call or demo today!
Learn more about the other methods of forecasting here !
