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Moving Averages Moving averages are used to level out the large fluctuations that can occur in a set of data that varies over time. They are an important tool in the financial/retail sectors as they can help identify trend within the data. In order to have a clearer picture of trend we will calculate a 3 point moving average. Mean for weeks 1-3 (5 + 7 + 3)/3 = 5 2-4 (7 + 3 + 8)/3 = 6 3-5 (3 + 8 + 7)/3 = 6 4-6 (8 + 7 + 0)/3 = 5 5 -7 (7 + 0 + 14)/3 = 7 Mean for weeks 6 -8 (0 + 14 + 7)/3 = 7 7-9 (14 + 7 + 3)/3 = 8 8-10 (7 + 3 + 5)/3 = 5 9-11 (3 + 5 + 13)/3 = 7 10-12 (5 + 13 + 6)/3 = 8 Example 1: The data in the table below gives information on car sales from a second hand car dealer over a 12 week period. 61353714078375 Cars Sold 121110987654321Week

5 0 Moving Averages 61353714078375 Cars Sold 121110987654321Week Mean for weeks 1-3 (5 + 7 + 3)/3 = 5 2-4 (7 + 3 + 8)/3 = 6 3-5 (3 + 8 + 7)/3 = 6 4-6 (8 + 7 + 0)/3 = 5 5 -7 (7 + 0 + 14)/3 = 7 Mean for weeks 6-8 (0 + 14 + 7)/3 = 7 7-9 (14 + 7 + 3)/3 = 8 8-10 (7 + 3 + 5)/3 = 5 9-11 (3 + 5 + 13)/3 = 7 10-12 (5 + 13 + 6)/3 = 8 1 23 4 56 7 8 9101112 Week 5 10 15 Car Sales Raw Data Moving Average Car sales show a slight rising trend We use the mid-points when plotting the moving averages.

In order to have a clearer idea of trend we will calculate a 4 point moving average. Mean for weeks: 1-4 (7 + 14 + 6 + 5)/4 = 8 2-5 (14 + 6 + 5 + 3)/4 = 7 3-6 (6 + 5 + 3 + 10)/4 = 6 4-7 (5 + 3 + 10 + 10)/4 = 7 5 -8 (3 + 10 + 10 +1)/4 = 6 Mean for weeks: 6 -9 (10 + 10 + 1 + 3)/4 = 6 7-10 (10 + 1 + 3 + 6)/4 = 5 8-11 (1 + 3 + 6 + 6)/4 = 4 9-12 (3 + 6 + 6 + 5)/4 = 5 Moving Averages Example 2: The data in the table below gives information on cycle sales from a cycle shop over a 12 week period last autumn. 5663110 356147 Bikes Sold 121110987654321Week Moving averages are used to level out the large fluctuations that can occur in a set of data that varies over time. They are an important tool in the financial/retail sectors as they can help identify trend within the data.

5663110 356147 Bikes Sold 121110987654321Week Mean for weeks: 1-4 (7 + 14 + 6 + 5)/4 = 8 2-5 (14 + 6 + 5 + 3)/4 = 7 3-6 (6 + 5 + 3 + 10)/4 = 6 4-7 (5 + 3 + 10 + 10)/4 = 7 5 -8 (3 + 10 + 10 +1)/4 = 6 Mean for weeks: 6-9 (10 + 10 + 1 + 3)/4 = 6 7-10 (10 + 1 + 3 + 6)/4 = 5 8-11 (1 + 3 + 6 + 6)/4 = 4 9-12 (3 + 6 + 6 + 5)/4 = 5 1 23 4 56 7 8 9101112 Week 5 10 15 0 Bike Sales Bike sales show a falling trend Raw Data Moving Average We use the mid-points when plotting the moving averages.

61353714078375 Cars Sold 121110987654321Week Worksheet 1 0 Car Sales 1 23 4 56 7 8 9101112 Week 5 10 15 Car Sales

Worksheet 2 5663110 356147 Bikes Sold 121110987654321Week Mean for weeks: Mean for weeks: 1 23 4 56 7 8 9101112 Week 5 10 15 0 Bike Sales