what is known as weighted average (i work in amanufacturing plant) and one of the managers uses this concept?

Answer 1

check this links out:

http://en.wikipedia.org/wiki/Weighted_average
http://mathworld.wolfram.com/ArithmeticMean.html

Answer 2

All averages are weighted. Weight simply means how many of the associated value. So, if you have the average 9 = (10 + 9 + 8)/3, the "weight" of each term (value) in the numerator is one. This results because each value occurs only once. How many times a given value occurs in a set of data is called its frequency.

But if there were two 10's instead of one in the example, we'd have (2X10 + 9 + 8)/4 = 37/4; so 10 has a weight of two. Weights also represent what percentage of all values each value contributes to the sum of values. For example, in the last illustration, the 10 contributes 2/4 = 50% of its value, and the other two terms (9 and 8) each contribute 25% of their value to the sum that is the weighted average = .50(10) + .25(9) + .25(8).

Note the denominator changed from 3 in the first example to 4 in the second. That's because when we added one more ten to the first one, we had now had four, not three, values in the data set. Average is over all data, in this case four; so the denominator had to be 4.

Bottom line, all averages are weighted, but sometimes that weight is one for all the data. However, in the real world, those weights are very often greater than one.

Answer 3

In regular average you just tot all components and divide ex.

Consider average price for these 3 Item Categories:

Stock Price Item 1 = $500, Item 2 = $2000, Item 3 = $400
Average Stock Value would be
=(500+2000+400)/3 = $966.66

That is fine as long as i have 1 of each item. In weighted average however you have to consider another element such as No of Items, so if i had loads of the higher item 2 then my weighted average will increase accordingly.

So if in above example we add no of items:

Stock Price - Item 1 = $500, Item 2 = $2000, Item 3 = $400
No of Items - Item 1 = 45, Item 2 = 173, Item 3 = 15
Weighted Average Stock Value would be
= (45 X 500 +173 X 2000 + 15 X 400)/(45+173+15) = $1607.30

Answer 4

Instead of computing the regular average,

(x1+x2+...+xn)/n,

you select positive weights w1,w2,...,wn, such that w1+w2+...+wn=1, and compute

(w1*x1+w2*x2+...+wn*xn) / n.

How you select w1,...,wn depends on the context. The larger a weight wi is, the more influence the corresponding element xi has on the weighted average.