Moodle allows you to drop the lowest grade(s) from a category of activities/items in the gradebook.
The activities/items MUST ALL BE OF EQUAL MAXIMUM VALUE.
The items must be contained with one category.
Do not apply this option until the end of the semester. Also, before using this function, fill any empty cells with zeros; otherwise, those cells will not be counted as a score when used with the Exclude Empty Grades option.
Do not have activities with weights of Zero. While this is a common technique to not count an activity, it breaks the rule that all grade items must be of equal value for this option to be available.
Dropping the lowest grade(s)
Go to the course homepage.
Find the Administration block:
Click Gradebook setup (Grades in Moodle 2.8)
From the gradebook drop-down menu, choose Gradebook Setup view (Categories and Items in Moodle 2.8) from the drop-down menu.
Go to the Category row; click the Edit link in the Action column for the category.
Click Edit Settings from the drop-down menu.
Enter a value in the Drop the Lowest textbox for a category. Note: If the Drop the Lowest box is grayed out, it is because one or more grade items in the category are not of equal value. All grade items in the category must be the exact same score for this option to be available. You will need to change all grade items to be the same value before applying this setting.
Click the Save changes button.
The category total adjusts and displays the sum of the included items. The category total line includes text indicating the dropping or keeping of X items.