Find the trend in the demand in rupees for a particular product in Delhi by the method of moving averages.

Question: Find the trend in the demand in rupees for a particular product in Delhi by the method of moving averages.

Year Demand(in Rs ’00)
198340
198442
198540
198644
198749
198846
198942
199044
199144
199250
199342
199448
199546
199652
199758
199856
199951
200057
200154
200263

Solution:

The appropriate period for the moving average is the period of cyclical variation. The given data does not reveal any regular cycle. But, if we examine the data, we have the peaks at the following points.

Marketing management solution

Data exhibits 6 cycles, but, with varying periods. The appropriate period of the moving averages is given by the average values of these periods, i.e., (3+5+2+3+3+2)/6=18/6=3. Hence, we will apply a three yearly moving average

YearDemand (in Rs ‘000)3 Yearly Moving Total3 Yearly Moving Average
198340  
19844212240.67
19854012642
19864413344.33
19874913946.33
19884613745.67
19894213244
19904413043.33
19914413846
19925013645.33
19934214046.67
19944813645.33
19954614648.67
19965215652
19975816655.33
19985616555
19995116454.67
20005716254
20015417458
200263  

We can roughly say that the demand for this product on an average touches its peak after 3 years.