The owner of Darkest Tans Unlimited in a local mall is forecasting this month's (October's) demand for the one new tanning booth based on the following historical data: $$\begin{array} { l l }
\text { Month } & \text { Number of Visits } \
\hline \text { April } & 100 \
\text { May } & 140 \
\text { June } & 110 \
\text { July } & 150 \
\text { August } & 120 \
\text { September } & 160
\end{array}$$ What is this month's forecast using a four-month weighted moving average with weights of .4, .3, .2, and .1?
A) 120
B) 129
C) 141
D) 135
E) 140

Question

The owner of Darkest Tans Unlimited in a local mall is forecasting this month's (October's) demand for the one new tanning booth based on the following historical data: $$\begin{array} { l l } 
\text { Month } & \text { Number of Visits } \
\hline  \text { April } & 100 \
\text { May } & 140 \
\text { June } & 110 \
\text { July } & 150 \
\text { August } & 120 \
\text { September } & 160
\end{array}$$ What is this month's forecast using a four-month weighted moving average with weights of .4, .3, .2, and .1?
A) 120
B) 129
C) 141
D) 135
E) 140

Quizplus · Accepted Answer

To calculate the four-month weighted moving average, we use the formula:

4MWA = (.4 x V1) + (.3 x V2) + (.2 x V3) + (.1 x V4)

Where V1 is the most recent month's demand, V2 is the demand from four months ago, etc.

Using the data from April through September, we can calculate:

4MWA = (.4 x 160) + (.3 x 120) + (.2 x 150) + (.1 x 110)
4MWA = 64 + 36 + 30 + 11
4MWA = 141

Therefore, the forecast for October is 141 visits. The correct answer is C.

The Owner of Darkest Tans Unlimited in a Local Mall