A firm's demand data from the last two quarters is displayed in the table. Use a three period weighted moving average with W_t= 0.7, W_t-1= 0.2, and W_t-2= 0.1 to forecast demand for July. $$\begin{array} { | c | c | } \hline \text { Month } & \text { Demand } \ \hline \text { January } & 154 \ \hline \text { February } & 148 \ \hline \text { March } & 214 \ \hline \text { April } & 180 \ \hline \text { May } & 225 \ \hline \text { June } & 246 \ \hline \end{array}$$ A)235.2 B)195.6 C)158.8 D)180.4

Question

Quizplus · Accepted Answer

The weighted moving average formula for period t is:

$F_t = WS1U1B1t D_{t} + WS1U1B1t-1 D_{t-1} + WS1U1B1t-2 D_{t-2}$

Where:
$D_{t}$ = demand in period t
$F_{t}$ = forecast for period t
$WS1U1B1t$, $WS1U1B1t-1$, $WS1U1B1t-2$ = weights for the most recent period, the period just before that, and the period two periods ago, respectively.

Using the weights given in the problem, we get:

$F_{July} = (0.7)(225)+(0.2)(246)+(0.1)(180) = 235.2$

Therefore, the forecast for demand in July is 235.2. The best choice is (A).

A Firm's Demand Data from the Last Two Quarters Is