Question

Problem 3. A company wants to forecast demand for June using a two period weighted moving average with weights of .6 (for May) and .4 (for April). Calculate the forecast for June. Jan 100 Feb 150 Mar 200 Apr 500 May 800 June

Answer 1

Answer:

June forecast = 680

Explanation:

Since we are required to use two period weighted moving average, the forecast for June can be calculated using the following formula:

June forecast = (April figure * Weight for April) + (May figure * Weight for May) ....... (1)

Where;

April figure = 500

Weight for April = 0.4

May figure = 800

Weight for May = 0.6

Substituting the values into equation (1), we have:

June forecast = (500 * 0.4) + (800 * 0.6) = 200 + 480 = 680