A method is only useful if you use it. You will want to reference (or call) the method where you want to use it.
In your code:
System.out.println("The average is: " + average(x, y, z) );
And to clarify, the average is the sum of all values divided by the number of values.
In this case it would be (x + y + z) / 3
not (x * y * z) /3