The Carbondale Hospital is considering the purchase of a new ambulance. The deci

Question

The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows Mileage 3,100 100 400 850 800 a) Using a 2-year moving average the forecast for year&=miles roundyour response to the nonst whole number b) ifa 2-year moving average is used to make the forecast. the MAD based on this- mles ound your esponse to one deo nal place) Hint You wil have only 3 years of matched data ) C The forecast for yea 6usinga eighted 2-year moving average with ei es of040 and 0 60 the eightof060is for the most recent period)= miles ou dyc response tote neaest hole numbe The MAD for the forecast developed using a welghted 2-year moving average with weights of 0.40 and 0.60(round your response to one decimal place) Hint You will have only 3 years of matched data) d) Using exponersal smoothing wita-o 40 and the forecast for year 1 being 3 100 the forecast for year 6- miles rond yorresponse to the nearest whole number)

Explanation / Answer

a) (3100+4000)/2 = 3550

(4000+3400)/2 = 3700

(3400+3850)/2 = 3625

(3850+3800)/2 = 3825

Therefore the forecast for the year 6 = 3825 miles

b) (3100+4000)/2 = 3550

(4000+3400)/2 = 3700

(3400+3850)/2 = 3625

Deviation:

3550 - 3400 = 150

3850 - 3700 = 150

3800 - 3625 = 175

Mean Absolute Deviation = (150+150+175)/3

= 158.3 Miles

c) Forecast for year 6 by 2 year moving averages with weights 0.4 and 0.6

= 0.6 * 3800 + 0.4 * 3850

= 2280 + 1540

= 3820

The Mean Absolute Deviation for the Forecast developed

3rd Year = 0.6*4000 + 0.4*3100

= 3640

4th year = 0.6*3400 + 0.4*4000

= 3640

5th Year = 0.6*3850 + 0.4*3400

= 3670

Deviation:

3640-3400 = 240

3850 - 3640 = 210

3800-3670 = 130

Mean Absolute Deviation = (240+210+130)/3

= 193.3

d) Exponential smoothing with constant = 0.4

2nd Year = 0.4 * 3100 + 0.6 * 3100

= 3100

3rd Year = 0.4*4000 + 0.6*3100

= 3460

4th Year = 0.4*3400 + 0.6*3460

= 3436

5th year = 0.4*3850 + 0.6*3436

= 3601.6

6th year = 0.4*3800 + 0.6*3601.6

= 3680.9

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