Question

The table below shows the demand for a new bath soap in a shop for each of the last 7 months.

Month 1 2 3 4 5 6 7 8
Demand 23 29 33 40 41 43 49 52

Compute the monthly sales forecast using a 4-month moving average, with weights 25%, 20%, 15%, 12%

Answer 1

Explanation:

To compute the monthly sales forecast using a 4-month moving average with the given weights, we can follow these steps:

1. Determine the weights for each of the four months. Based on the provided weights (25%, 20%, 15%, 12%), we can assign the following weights to the respective months in reverse order:

Month 1: 12%

Month 2: 15%

Month 3: 20%

Month 4: 25%

2. Calculate the forecast for each month by multiplying the demand for the corresponding month by the assigned weight and summing them up.

For Month 5:

Forecast = (Demand for Month 5 * Weight for Month 1) + (Demand for Month 4 * Weight for Month 2) + (Demand for Month 3 * Weight for Month 3) + (Demand for Month 2 * Weight for Month 4)

Forecast = (41 * 0.12) + (40 * 0.15) + (33 * 0.20) + (29 * 0.25)

Forecast = 4.92 + 6 + 6.6 + 7.25

Forecast ≈ 24.77

Similarly, you can calculate the forecasts for the remaining months using the same approach.

Month 6:

Forecast = (43 * 0.12) + (41 * 0.15) + (40 * 0.20) + (33 * 0.25)

Month 7:

Forecast = (49 * 0.12) + (43 * 0.15) + (41 * 0.20) + (40 * 0.25)

Month 8:

Forecast = (52 * 0.12) + (49 * 0.15) + (43 * 0.20) + (41 * 0.25)

By performing these calculations, you can determine the monthly sales forecasts for each of the remaining months based on the given demand and weights.