What is the three-period weighted moving average for july using the weights 0.5 (most recent), 0.3, and 0.2?
The three-period weighted moving average for july is 145.4.
What is Weighted Moving Average?
A weighted moving average technique is one of several methods for forecasting a given month’s value or attribute. Other techniques for forecasting from historical data include the evenly weighted moving average method, a regression analysis method, and so on.
When evaluating the movable average estimate of such an observation, each observation is usually weighted the same way.
In some cases, it is advantageous to assign different weights to the observations so that the observation closest to the forecasted time period has a higher weight.
This is known as the weighted moving average method. In such a weighted moving average technique, the sum of the individual weights must equal 1.
Now, according to the question;
The weighted moving average strategy forecast for month of July is given by:
= (Weight for May * Sales for May) + (Weight for April * Sales for April) + (Weight for June * Sales for June)
= (0.5 * 148) + (0.3 * 142) + (0.2* 144)
= 145.4
Therefore, the three-period weighted moving average for july is 145.4.
To know more about the Weighted Moving Average, here
What is Weighted Moving Average?