Homework SourseData collected on the yearly demand for 50pound bags of fert
Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table. Develop a 3-year moving average to forecast sales. Then estimate demand again with a weighted moving average in which sales in the most recent year are given a weight of 2 and sales in the other 2 years are each given a weight of 1. Which method do you think is best? Please show your work.
DEMAND FOR FERTILIZER
YEAR (1,OOOS OFBAGS)
1 4
2 6
3 4
4 5
5 10
6 8
7 7
8 9
9 12
10 14
11 15
Solution
Weighted Moving average gives the is the best forecast.
| Year | Bags | 3-Yrs Moving Average | Weighted Moving Average |
| 1 | 4 | - | |
| 2 | 6 | (4+6+4)=14/3=4.66 | (4*1+6*1+4*2)=18/4=4.5 |
| 3 | 4 | (6+4+5)=15/3=5 | (6*1+4*1+5*2)=20/4=5 |
| 4 | 5 | (4+5+10)=19/3=6.33 | (4*1+5*1+10*2)=29/4=7.25 |
| 5 | 10 | (5+10+8)=23/3=7.66 | (5*1+10*1+8*2)=31/4=7.75 |
| 6 | 8 | (10+8+7)=25/3=8.33 | (10*1+8*1+7*2)=32/4=8 |
| 7 | 7 | (8+7+9)=24/3=8 | (8*1+7*1+9*2)=33/4=8.25 |
| 8 | 9 | (7+9+12)=28/3=9.33 | (7*1+9*1+12*2)=40/4=10 |
| 9 | 12 | (9+12+14)=35/3=11.66 | (9*1+12*1+14*2)=49/4=12.25 |
| 10 | 14 | (12+14+15)=41/3=13.66 | (12*1+14*1+15*2)=56/4=14 |
| 11 | 15 | - |
