A company wants to forecast demand using the weighted moving average.If the company uses three prior yearly sales values , and we want to weight year 2011 2014 at 30 percent, year 2012 2015 at 30 percent, and year 2013 2016 at 40 percent, which of the following is the weighted moving average forecast for year 20142017?
A)170
B)168
C)158
D)152
E)146

Question

Quizplus · Accepted Answer

The formula for weighted moving average is: 
Weighted moving average = (w1 * Yn) + (w2 * Yn-1) + (w3 * Yn-2) 
where Yn-2, Yn-1, Yn are the sales values of the previous years, and w1, w2, w3 are the weights for those years, respectively.

For the given problem: 
Y14 = 2014 sales value 
Y15 = 2015 sales value 
Y16 = 2016 sales value

Weighted moving average = (0.3 * Y15) + (0.3 * Y14) + (0.4 * Y13) 
= (0.3 * 170) + (0.3 * 160) + (0.4 * 140) 
= 51 + 48 + 56 
= 155

Therefore, the closest answer choice is C) 158.

A Company Wants to Forecast Demand Using the Weighted Moving