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    Question

    When performing trend analysis for forecasting sales,

    which of the following methods is most commonly used to identify future trends based on historical data?
    A Data clustering Correct Answer Incorrect Answer
    B Moving average Correct Answer Incorrect Answer
    C Logistic regression Correct Answer Incorrect Answer
    D K-means algorithm Correct Answer Incorrect Answer
    E Text mining Correct Answer Incorrect Answer

    Solution

    Trend analysis often involves the use of techniques that help smooth out fluctuations in data over time to identify underlying patterns or trends. The moving average method is widely used in sales forecasting because it takes a set period of historical data (e.g., the past 3 months or 12 months) and averages the values to provide a smoother, clearer view of trends. This method helps to filter out short-term fluctuations or noise in the data and highlights the overall direction (upward or downward) of sales performance. Moving averages can be simple or weighted to give more importance to recent data, making them a valuable tool in forecasting future trends. Why Other Options Are Incorrect: • A: Data clustering is used for grouping similar data points together based on certain features, but it is not a forecasting method. • C: Logistic regression is useful for classification tasks, such as predicting probabilities of events, but it is not commonly used for trend forecasting in sales. • D: K-means is a clustering algorithm and is not intended for time series forecasting or identifying trends over time. • E: Text mining is focused on extracting useful information from unstructured text data and is not applicable to forecasting trends in numerical data like sales figures.

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