Certified Production & Operations Manager (POM) Practice Exam

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What is the attendance forecast for a concert using a two-year weighted moving average with weights of .7 and .3?

11400
19000
18600
19400

The correct answer is: 19400

In a two-year weighted moving average, the most recent year gets a higher weight compared to the previous year. In this case, the weights assigned are 0.7 for the most recent year and 0.3 for the year before that. To calculate the attendance forecast, you would take the attendance numbers from the two most recent years, multiply the most recent year's attendance by 0.7, and the previous year's attendance by 0.3. Then, you sum these two products to arrive at the forecast. If the weighted moving average results in an attendance forecast of 19,400, it means that the figures from the most recent year and the prior year have been effectively positioned to reflect the expected attendance, with the current trends being given more influence. The use of a weighted moving average is particularly beneficial in scenarios where current data is expected to be more indicative of future conditions. Hence, the applied weights in this context help to arrive at a forecast that sensibly balances current performance against historical data.