Weighted Moving Averages and MAD

This tutorial covers the concept of weighted moving averages, focusing on 4-week and 2-week calculations. It explains how to apply different weights to recent data points to forecast sales and compares error measures using the Mean Absolute Deviation (MAD). The video demonstrates calculations for both methods and concludes that the 2-week method provides a better forecast based on MAD values. Viewers are encouraged to leave questions or comments.

What is the primary purpose of using a weighted moving average in forecasting?

• To simplify the calculation process

• To place more importance on certain periods over others

• To emphasize older data over recent data

• To give equal importance to all data points

Which weight is applied to the most recent value in a 4-week weighted moving average?

• 0.2

• 0.3

• 0.4

• 0.1

How is the forecast for week 5 calculated using the 4-week weighted moving average?

• 0.1(45) + 0.2(40) + 0.3(44) + 0.4(39)

• 0.3(45) + 0.4(40) + 0.2(44) + 0.1(39)

• 0.4(45) + 0.3(40) + 0.2(44) + 0.1(39)

• 0.2(45) + 0.3(40) + 0.4(44) + 0.1(39)

What is the forecast for week 8 using the 4-week weighted moving average?

• 41.6

• 40.6

• 42.7

• 41.1

What is the Mean Absolute Deviation (MAD) for the 4-week weighted moving average model?

• 3.50

• 4.15

• 3.07

• 2.92

What is the significance of the weights adding up to 1 in the weighted moving average?

• It simplifies the calculation

• It ensures equal distribution of importance

• It ensures the sum of weights is normalized

• It is not necessary for accurate forecasting

What is the absolute error for week 5 in the 4-week weighted moving average model?

• 2.6

• 3.0

• 1.9

• 4.7

In the 2-week weighted moving average example, what do the weights 3 and 2 add up to?

• 3

• 7

• 1

• 5

How is the forecast for week 3 calculated using the 2-week weighted moving average?

• 3(44) + 2(39) divided by 5

• 2(44) + 3(39) divided by 5

• 3(39) + 2(44) divided by 5

• 2(39) + 3(44) divided by 5

What is the Mean Absolute Deviation (MAD) for the 2-week weighted moving average model?

• 4.15

• 2.92

• 3.07

• 3.50