A moving average model derives a forecast by taking an average of a set of recent demand values. By basing the forecast on more than one observed demand$$ value, the moving average model is less susceptible to random swings in demand. The model is stated as$$ follows:

Upper F Subscript t plus $1$ Baseline equals StartFraction Summation from i equals $1$ to n Upper D Subscript t plus $1$ minus i Over n EndFraction

$,$

where$$ Upper F Subscript t plus $1$

equals

forecast for time period tplus$1,$

Upper D Subscript t plus $1$ minus i

equals

actual demand for period tplus$1$minus$$i$,$

n

equals

number of most recent demand observations used to develop the forecast.