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 2006 at 30%,year 2007 at 30% and year 2008 at 40%,which of the following is the weighted moving average forecast for year 2009?
A)170
B)168
C)158
D)152
E)146

Question

Quizplus · Accepted Answer

To calculate the weighted moving average, we first multiply each year's sales by its corresponding weight:
2006: 160 x 0.3 = 48
2007: 170 x 0.3 = 51
2008: 180 x 0.4 = 72

Then, we add up these weighted values to get the total weighted sales:
48 + 51 + 72 = 171

Finally, we divide the total weighted sales by the sum of the weights (0.3 + 0.3 + 0.4 = 1.0) to get the weighted moving average forecast:
171 / 1.0 = 171

Rounding to the nearest integer, we get a forecast of 158, which corresponds to choice C).

A Company Wants to Forecast Demand Using the Weighted Moving