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BMATH

Weighted moving averages place more emphasis on recent data values by applying higher weights to more recent periods. The weighted moving average is calculated by summing the products of each period's demand and its assigned weight, and dividing this total by the sum of all weights. For example, a 3-period weighted moving average forecast for auto demand would take the demand from the last 3 periods, apply weights of 1, 2, and 3, multiply each by its demand, sum these products, and divide by the total weight of 6.

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14 views6 pages

BMATH

Weighted moving averages place more emphasis on recent data values by applying higher weights to more recent periods. The weighted moving average is calculated by summing the products of each period's demand and its assigned weight, and dividing this total by the sum of all weights. For example, a 3-period weighted moving average forecast for auto demand would take the demand from the last 3 periods, apply weights of 1, 2, and 3, multiply each by its demand, sum these products, and divide by the total weight of 6.

Uploaded by

Fatima Uli
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Weighted Moving

Averages
 Weight can be used to place more
emphasis in recent values, when there is
a trend or pattern. This makes the
techniques more responsive to changes
since more recent period may be more
heavily weighted.
A weighted moving average may be
expressed mathematically as:

∑[weight for period n) (demand in period n)]


Weighted Moving Average =
∑ Weights
EXAMPLE:
Compute a three-period weighted moving average
forecast given the following demand for cars the last five
periods; with an assigned weighted of 1,2, and 3.

DEMAND SUPPLY
1 70
2 80
3 65
4 90
5 85
SOLUTION:
The forecast for period 6 would be:

Weighted Moving 65(1) + 90(2) + 85(3)


Average Forecast = 6

= 65 + 180 + 245
6
= 490
6
= 81.67 or 82 cars
Weighted moving 90(1) + 85(2) + 95(3)
Average Forecast = 6

= 90 + 170 + 285
6
= 545
6
= 90.83 or 91 cars

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