Petr Kedzior Mar 3, 2013:

Re: DLyons Well, so it's pretty simple then. Just show where my thinking is wrong in the below example and what you mean by a "weighted average" here. For the sake of simplicity and uniform approach, please use the five daily values given in the example.
Thank you.

DLyons Mar 3, 2013:

@Petr With all due respect, that's just plain wrong.

I will post no more on this question :-)

Michal Zugec Mar 3, 2013:

Petr, úplne presne!

Petr Kedzior Mar 3, 2013:

Let me give you an example. Say the daily prices are as follows:

Mo: €1.25
Tue: €1.27
We: €1.25
Thu: €1.26
Fri: €1.24

The arithmetic average would be calculated as follows: (1.25+1.27+1.25+1.26+1.24)/5 = €1.254

There is no "weighted average" as all the daily values have a weight of 1.

But assume, you want to take into account the volume of gas sold on each day. On Mo, you sell 1500 l, on Tue 1300 l, on Wed 1000 l, on Thu 1100 l, Fri 2000 l.

Then you can calculate the weighted avg price as follows: (1500*1.25+1300*1.27+1000*1.25+1100*1.26+2000*1.24)/(1500+1300+1000+1100+2000)*5 = €1.2524

So, the weighted 5-day average price taking into account the volume sold on each day would be €1.2524. The daily prices are weigted as per the volume sold.

DLyons Mar 3, 2013:

There isn't enough context to make clear what operation is being carried out here! I'm reading "jedného litra" as "per litre" rather than "one litre" (because one litre seems meaningless to me).

Weighting by day number would be weird!

Petr Kedzior Mar 3, 2013:

I think that what DLyons says is a common misunderstanding of the concept of a weighted average. In this situation, the "weighted" average equals arithmetic average, so there is no need to call this average "weighted". A weighed average would make sense if, for instance, the price on a certain day would be more/less important than the other ones and would, therefore, be given a special "weight"

Michal Zugec Mar 3, 2013:

DLyons, in the question is specified: "one liter". There are no other units.

DLyons Mar 3, 2013:

Weighting would normally be done by the number of units of each type.

Michal Zugec Mar 3, 2013:

Vážený priemer by to bol, ak by sa niektorým hodnotám prikladala rôzna "váha". Napr. posledný deň/týždeň by mal váhu "4", predposledný "3", atď.

Nathaniel2 (asker) Mar 3, 2013:

better context cena je vypocitana ako podiel suctu dennych/tyzdennych hodnot a poctu jednotlivych cien

Nathaniel2 (asker) Mar 3, 2013:

yes, average price

Petr Kedzior Mar 3, 2013:

is this supposed to be a calculation of an average price?