Question

John's house of pancakes uses a weighted moving average method to forecast pancake sales. it assigns a weight of 5 to the previous month's demand, 3 to demand two months ago, and 1 to demand three months ago. if sales amounted to 1000 pancakes in may, 2200 pancakes in june, and 3000 pancakes in july, what should be the forecast for august?

Answer 1

To calculate for the demand for August, we should consider that the formula should be in the form:

Demand for August = Summation (Weight ratio * Demand)

Where: weight ratio = weight of that month / total weight of 3 months

Demand for August = (5/9)*3000 + (3/9)*2200 + (1/9)*1000

Demand for August = 2511