Question

Historical demand for a product is:

DEMAND

January 12

February 11

March 15

April 12

May 16

June 15

Using a weighted moving average with weights of 0.60, 0.30, and 0.10, find the July forecast. Remember to use the largest weight for the most recent month.

Answer 1

To forecast the July demand using the weighted moving average method, we multiply the June, May, and April demands by their respective weights of 0.60, 0.30, and 0.10 and sum these products. The result is a forecasted demand of 15 units for July.

Step-by-step explanation:

To find the July forecast using a weighted moving average with weights of 0.60 for the most recent month (June), 0.30 for the previous month (May), and 0.10 for the month before that (April), we apply the weights to the historical demand data provided.

The calculation would be as follows:

Weighted Moving Average = (Demand in June × Weight for June) + (Demand in May × Weight for May) + (Demand in April × Weight for April)

Substituting the given values:

= (15 × 0.60) + (16 × 0.30) + (12 × 0.10)

= (9) + (4.8) + (1.2)

= 15

So, the forecasted quantity demanded for July is 15 units.