The following table includes the information about a monthly time series. When a

Question

The following table includes the information about a monthly time series.

  

When a forecast is made by the three-month moving average method, all three monthly observations used to make this forecast are treated equally in the sense that each of them has the same weight of 1/3. What is the forecast for May when the three-month weighted moving average method is applied with the weights: 1/6, 2/6, and 3/6? Assign the smallest weight to the oldest data and the largest weight to the most recent data.

21.17

19.00

18.67

24.00

Month Time Series January 21 February 17 March 19 April 24

Explanation / Answer

Below table gives the complete computation of weighted moving average

Hence option (A) 21.17 is correct

Month Time Series(t) Weights(w) t*w Jan 21 Feb 17 0.1667 2.8333 Mar 19 0.3333 6.3333 April 24 0.5 12 Sum 21.1667

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