Question

Sandy sells customized books online. He wants to forecast sales by weighting the past 3 months...

Sandy sells customized books online. He wants to forecast sales by weighting the past 3 months with more weights given to recent data. Using the data below, calculate the forecast for Sandy for months 4, 5, and 6 using weights of .3, .2, .1.

 Actual Weighted Average (forecast) Month 1 128 Month 2 140 Month 3 130 Month 4 154 Month 5 160 Month 6 166

Forecast for month 4 = (0.3*Actual Demand of Month 3 + 0.2*Actual Demand of Month 2 + 0.1*Actual Demand of Month 1)/(Sum of Weight) = (0.3*130 + 0.2*140 + 0.1*128)/(0.3+0.2+0.1) = (39 + 28 + 12.8)/(0.6) = 133

Forecast for month 5 = (0.3*Actual Demand of Month 4 + 0.2*Actual Demand of Month 3 + 0.1*Actual Demand of Month 2)/(Sum of Weight) = (0.3*154+ 0.2*130+ 0.1*140)/(0.3+0.2+0.1) = (46.2 + 26 + 14)/(0.6) = 143.67

Forecast for month 6 = (0.3*Actual Demand of Month 5 + 0.2*Actual Demand of Month 4 + 0.1*Actual Demand of Month 3)/(Sum of Weight) = (0.3*160+ 0.2*154+ 0.1*130)/(0.3+0.2+0.1) = (48 + 30.8+ 13)/(0.6) = 153

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