anty Doctors Hospital is considering the purchase of a new ambulance. The decisi

Question

anty Doctors Hospital is considering the purchase of a new ambulance. The decision will miles driven during the past 5 years are as rest partly on the anticipated mileage to be driven next year. The follows Year Mil 3,000 4,000 3,600 3,800 3,700 a) Forecast the mileage for the next year using 2-year moving average b) Find the MAD for your forecast in part (a) c) Use a weighted 2-year moving average with weights of 4 and 6 to forecast next year's mileage. (The weight of.6 is for the most recent year.) What is the MAD of this forecast? d) Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 3,000 miles and = 0.4

Explanation / Answer

for 2 year moving average forcast =average value of last 2 year.

a)

from above mileage for next year =3750

b) MAD for forecast =33.33

c)

for two year weighted moving average =0.6*most recent year actual+0.4*last to last year actual

from above:

next year forecast =3740

and MAD =20

d)

from exponential smoothing; forecast for next year =0.4*last year actual+(1-0.4)*last year forecast

next year forecast =3644.8

and MAD =403

Year Mileage(actual(A)) Forecast(F) |A-F| 1 3000 2 4000 3 3600 3500 100 4 3800 3800 0 5 3700 3700 0 6 3750 total 100 average 33.33 MAD

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