Weighted Moving Averages are moving averages of moving averages. In other words, rather than replace the oldest observations within the data, the Weighted Moving Average replaces the oldest moving average with the most recent moving average. In this way, Weighted Moving Averages handle significant data trends better than a plain moving average. Weighted Moving Average forecasts are used to overcome the strong effect of extreme values within a time series by assigning current data more weight than older data. The start and history parameters are the same as those in moving averages.
To use the Weighted Moving Average forecasting technique:
- Click on the Forecast Method tab.
- In the Forecast Technique area, scroll through the list of methods and select Weighted Moving Average. The Weighted Moving Average Forecasting technique displays.
- Select Edit parameters to activate Weighted Moving Average’s parameters.
- In the Parameters area, type in a number for the Average Periods.
- Click Finish.