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28 October, 21:46

A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values (i. e., year 2012 = 110 and year 2013 = 130), and we want to weight year 2015 at 20% and year 2016 at 80%, which of the following is the weighted moving average forecast for year 2017? A. 126 B. 128 C. 133 D. 38 E. 142

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  1. 28 October, 21:50
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    option (A) 126

    Explanation:

    Data provided in the question:

    Sales value for the year 2012 = 110

    Sales value for the year 2013 = 130

    Weight for the year 2015 = 20% = 0.20

    Weight for the year 2016 = 80% = 0.80

    Now,

    In the weighted moving average method of forecasting

    New forecast = ∑ (Previous forecasts * weights for the given year)

    thus,

    Forecast for the year 2017

    = (Sales in 2015 * weight for 2015) + (Sales in 2016 * weight for 2016)

    since,

    the sales value for 2012 and 2013 are taken for the years 2015 and 2016

    therefore,

    Forecast for the year 2017 = (110 * 0.20) + (130 * 0.80)

    = 22 + 104

    = 126.00

    Hence,

    The correct answer is option (A) 126
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