A three-period moving average forecast for period 4 using actuals 5, 7, 9 is what?

• A. 7
• B. 6
• C. 8
• D. 9

Answer: (A)

A three-period moving average forecast uses the average of the three most recent actual values to predict the next period. Here, the three most recent actuals are 5, 7, and 9, so the forecast for the next period is (5 + 7 + 9) / 3 = 7. This method smooths short-term fluctuations by weighting each of the last three observations equally. The other numbers wouldn’t come from averaging those three values—7 is the exact average of 5, 7, and 9, while 6 or 9 would come from different approaches or data, not from the three-period average of these observations.