Question

Emand for a particular type of battery fluctuates from one week to the next. A study of the last six weeks provides the following demands (in dozens): 7, 8, 6, 5, 10, 12 (last week).

(a) Forecast demand for the next week using a two-week moving average.
(b) Forecast demand for the next week using a three-week moving average.

Answer 1

a) Demand for next week (2-weeks-moving-average) = 11 dozens

a) Demand for next week (3-weeks-moving-average) = 9 dozens

Explanation:

The moving average used for forecast takes past values and average them to predict future values fo the variable.

Is calculated by taking the arithmetic mean of a given set of values. In this case, we will forecast using 2 and 3 weeks.

In the case of 2 weeks moving average, we take the last two weekly sales and average them:

`S_(n+1)=(S_n+S_(n-1))/(2)=(12+10)/(2)=(22)/(2)=11`

For the case of 3 weeks moving average, we take the last three weekly sales and average them:

`S_(n+1)=(S_n+S_(n-1)+S_(n-2))/(3)=(12+10+5)/(3)=(27)/(3)=9`