Weighted Moving Average Method

For the example data given in Table 2.1, let the weights (Wj, W2, W3) = (0.2,0.3,0.5). Then the 3 month weighted moving average forecast for month 7 will be 

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To determine the best weights for the weighted moving average method, a linear programming (LP) model can be used. The objective of fhe LP model is to find fhe opfimal weighfs fhaf minimize the forecast error. Let denote the forecast error in period t. Then, e, is given by... 

Joe Kool has decided to use 3-month weighted moving average method for one of his company s products. Last year s monthly sales data are given in Table 2.19. 

The technique of kriging uses a weighted moving average interpolation method [BUSCHE and BURDEN, 1991] in the sense of a straightforward linear regression [JOURNEL, 1988]. The weights, w, are determined on the basis of the experimental... 

A second time-series forecasting method is the weighted moving average. Instead of simply taking the average of a set number of periods, this method weights the more recent periods heavier than the older periods. 

Thus, the complete LP model for finding the weights for the weighted m-period moving average method will be as follows ... 

Crowder, S., A Simple Method for Studying Run Length Distributions of Exponentially Weighted Moving Average Charts, Technometrics, 29, 401-407 (1987). 

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