For a given number (n) of neighbouring points (p) within a given radius, the IDW value for a point of interest (v) is calculated as follows.
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Calculate the Euclidean distance between each of the neighboring points (pi)
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Normalize the Euclidean distances calculated as a ratio relative to the maximum Euclidean distance value (or any other chosen maximum).
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Choose a suitable attenuation power to use for weighting
Consult the figure below for a visual representation of the attenuation rate for some selected power values:
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Calculate the IDW by performing a weighted average of the neighboring points' values using the points' respective weights.