Here are the data for the past 21 months for actual sales of a particular produc

Question

Here are the data for the past 21 months for actual sales of a particular product: LAST YEAR THIS YEAR 345 January March May 290 375 365 475 470 400 470 430 325 325 365 280 375 une August September October November December 535 570 Develop a forecast for the fourth quarter using a three-quarter, weighted moving average. Weight the most recent quarter 0.50, the second most recent 0.25, and the third 0.25. Do the problem using quarters, as opposed to forecasting separate months. (Round your answer to 2 decimal places.) Forecast for the fourth quarter

Explanation / Answer

Solution:

Using the three-quarter weighted moving average, the forecast for the fourth quarter of this year can be determined as below:

Forecast for the fourth quarter = [(Total sales for 3rd quarter of this year x weight 1) + (Total sales for 2nd quarter of this year x weight 2) + (Total sales for 1st quarter of this year x weight 3)]

Total sales for 3rd quarter of this year = 375 + 280 + 365 = 1020

Total sales for 2nd quarter of this year = 325 + 440 + 475 = 1240

Total sales for 1st quarter of this year = 365 + 375 + 290 = 1030

Forecast for the fourth quarter = (1020 x 0.50) + (1240 x 0.25) + (1030 x 0.25)

Forecast for the fourth quarter = 1077.50

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