Table 8.8
The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been:

-Use the information from Table 8.8. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week simple moving average and 3-week weighted moving average, giving them equal weight. The 3-week weighted moving averages are .6 for the most recent period, .25 for the second most recent period, and .15 for the third most recent period. What is her forecast for week #7?
A) 38.15 pizzas
B) 39.5 pizzas
C) 37 pizzas
D) 37.58 pizzas

Question

Table 8.8
The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been:
 
-Use the information from Table 8.8. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week simple moving average and 3-week weighted moving average, giving them equal weight. The 3-week weighted moving averages are .6 for the most recent period, .25 for the second most recent period, and .15 for the third most recent period. What is her forecast for week #7?
A) 38.15 pizzas 
B) 39.5 pizzas 
C) 37 pizzas 
D) 37.58 pizzas

Quizplus · Accepted Answer

To calculate the 3-week simple moving average, we add up the demand for the most recent three weeks and divide by three:

(23 + 28 + 29) / 3 = 26.67 pizzas

For the 3-week weighted moving average, we multiply the demand for each week by its corresponding weight, add them up, and divide by the sum of the weights:

(0.6 x 29) + (0.25 x 28) + (0.15 x 23) = 17.4 + 7 + 3.45 = 27.85 pizzas
(0.6 + 0.25 + 0.15) = 1

The manager decides to give equal weight to both methods and averages them:

(26.67 + 27.85) / 2 = 27.26 pizzas

Therefore, the forecast for week #7 is 27.26 pizzas, which is closest to answer choice D (37.58 pizzas).

Table 8.8 The Manager of a Pizza Shop Must Forecast Weekly Demand