Didn't we just do this one?
Double posting is discouraged.
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.
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:
[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.
[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!