As you can see in the following table, demand for heart transplant surgery at Wa

Question

As you can see in the following table, demand for heart transplant surgery at Washington General Hospital has increased steadily in the past few years: YEAR 6 45 50 52 56 58 The director of medical services predicted 6 years ago that demand in year 1 would be 41 surgeries. a) Use exponential smoothing, first with a smoothing constant of.6 and then with one of .9, to develop forecasts for years 2 through 6 b) Use a 3-year moving average to forecast demand in years 4, 5, and 6. c) Use the trend-projection method to forecast demand in years 1 through 6 d) With MAD as the criterion, which of the four forecasting methods is best? PX APPEND 3.16 (a) (c) 64,78 11 96 100 n

Explanation / Answer

a-c)

d)

Looking at the above data, we can say that trend projection method is the best

Year Heart transplants ES (a=0.6) ES (a=0.9) 3 SMA Trend Abs Dev ES (a=0.6) Abs Dev ES (a=0.9) Abs Dev 3 SMA Abs Dev Trend 1 45 45 45 45.8 2 50 45 45 49 3 52 48 49.5 52.2 4 56 50.4 51.75 49 55.4 5.6 4.25 7 0.6 5 58 53.76 55.575 52.66666667 58.6 4.24 2.425 5.333333333 0.6 6 56.304 57.7575 55.33333333 61.8 MAD MAD MAD MAD 4.92 3.3375 6.166666667 0.6 SUMMARY OUTPUT Regression Statistics Multiple R 0.988483301 R Square 0.977099237 Adjusted R Square 0.969465649 Standard Error 0.894427191 Observations 5 ANOVA df SS MS F Significance F Regression 1 102.4 102.4 128 0.001481065 Residual 3 2.4 0.8 Total 4 104.8 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 42.6 0.938083152 45.41175258 2.35076E-05 39.61460074 45.58539926 39.61460074 45.58539926 Year 3.2 0.282842712 11.3137085 0.001481065 2.299868255 4.100131745 2.299868255 4.100131745

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