A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values (i. e., year 2012 = 110 and year 2013 = 130), and we want to weight year 2015 at 20% and year 2016 at 80%, which of the following is the weighted moving average forecast for year 2017? A. 126 B. 128 C. 133 D. 38 E. 142

option (A) 126

Explanation:

Data provided in the question:

Sales value for the year 2012 = 110

Sales value for the year 2013 = 130

Weight for the year 2015 = 20% = 0.20

Weight for the year 2016 = 80% = 0.80

Now,

In the weighted moving average method of forecasting

New forecast = ∑ (Previous forecasts * weights for the given year)

thus,

Forecast for the year 2017

= (Sales in 2015 * weight for 2015) + (Sales in 2016 * weight for 2016)

since,

the sales value for 2012 and 2013 are taken for the years 2015 and 2016

therefore,

Forecast for the year 2017 = (110 * 0.20) + (130 * 0.80)

= 22 + 104

= 126.00

Hence,

The correct answer is option (A) 126