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Math Help - How to calculate Weighted Average for price increase/decrease

  1. #1
    Moe
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    Unhappy How to calculate Weighted Average for price increase/decrease

    Hello,
    I have been asked recently by my manager to provide some analysis to the average price increase/decrease for our products. He mentioned that I need to use weighted average.


    I am comparing the percentage of a price increase/decrease for 5 products during Jan 2007 & Jan 2008. My aim is to find the weighted average for the % of the price increase/decrease.
    I have been told that weighted average is calculated using a different method and I am not sure how to do that.
    I hope you can explain to me how weighted average is cacluated. Thank you
    I have simply used the following method : Sum(13%,12.5%,-18.18%,0%,-3.85%)/5 = 0.69%

    Please refer to the attached file for the example. Also note that my real life file consist of about 1000 products.
    Attached Files Attached Files
    Last edited by Moe; May 12th 2008 at 06:11 AM.
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  2. #2
    MHF Contributor
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    Didn't we just do this one?

    Double posting is discouraged.
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  3. #3
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    Are you comparing different products?

    For example: PRODUCT PRICE LAST CHANGE (% or not) VOLUME

    A 10 -1 100
    B 15 +2 200
    C 35 +1 50

    You can weight each price change by price or by volume (I would use the volume). This would be:

    BY PRICE:

    [10*(-1)+15*(+2)+35*(+1)]/[10+15+35] = ...

    This is rather odd because the higher the price, the higher the weight. And you do not measure importance by price.

    BY VOLUME

    [100*(-1)+200*(+2)+50*(+1)]/[100+200+50] = ...

    This is correct. The total price change is related to the amounts of each product in stock.

    Hope this helps!


    Federico.
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  4. #4
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    I didn't know it has been solved before. Sorry.
    Bye,

    Federico.
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