Question

Suppose a three period weighted average is being used to forecast demand. Weights for the periods are as follows: 0.1, 0.4 and 0.5. Demand observed in the previous three periods was as follows: 120, 140 and150. What will be the demand forecast for period the next periodt

Answer 1

Answer:

$143

Explanation:

The computation of the demand forecast is shown below:

= Weightage × demand observed + Weightage × demand observed +  Weightage × demand observed

= 0.1 × 120 + 0.4 × 140 + 0.5 × 150

= $12 + $56 + $75

= $143

Basically we multiplied the weighatge with its demand observed so that the demand forecast could come