Question

"Kim s Nail Salon uses a 3 period weighted moving average method to forecast demand. She assigns a weight of 5 to the previous months demand, 3 to demand two months ago, and 2 to demand three months ago. If demand was 800 customers in April, 900 customers in May, 1,200 customers in June, and 2,000 customers in July, what should her forecast for August be?"

Answer 1

Answer:

1,540 customers

Explanation:

The computation of the forecasted customers for august is shown below:

= (Weight of May × Demand of May + Weight of June × Demand of June  Weight of July × Demand of July) ÷ (Total Weightage)

= (2 × 900 + 3 × 1200 + 5 × 2000) ÷ (5 + 3 + 2)

= (1,800 + 3,600 + 10,000) ÷ (10)

= 15,400 ÷ 10

= 1,540 customers