1. AS you can see in the following table, the demand for heart transplant surger

Question

1. AS you can see in the following table, the demand for heart transplant surgery at Washington General Hospital has decreased steadily in the past few years: Year 1 2 3 4 5 6 Heart Transplants 60 58 56 52 50 40 a) Compute a 2-year moving average for years 3 thru 6. b) Compute MAD. c) How do you interpret your answer in part(b)? 2. a) Using the data from problem 1, compute a 3-year weighted moving average for years 4 thru 6 in which heart transplant surgeries in the most recent year is given a weight of 6, and surgeries in the other two years are each given a weight of 3. b) Compute the MAPE. c) How do you interpret the answer in part(b)?

Explanation / Answer

1.a) Compute a 2-year moving average for years 3 thru 6. Year DEMAND FORCAST 1 60 2 58 3 56 59 4 52 57 5 50 54 6 40 51 b) COMPUTE MAD Mean Absolute Deviation (MAD) DEMAND FORCAST DEVIATION ABSOLUTE DEVIATION 56 59 -3 3 52 57 -5 5 50 54 -4 4 40 51 -11 11 SUM of IerrorsI= 23 MAD 5.75 SUM Iforcast errors I/n c) The MAD is the best forecast method for the low volume data and simple to analyze the error. 2.a) 3-year weighted moving average with weights of 6, 3 and 3 MAPE= I ERROR I/ACTUAL*100% Period Actual 3WMA ERROR I ERROR I I % ERROR I 1 60 2 58 3 56 4 52 57.5 -5.5 5.5 0.11 5 50 54.5 -4.5 4.5 0.09 6 40 52 -12 12 0.3 0.50 2.b) MAPE 0.17 2.c)MAPE(MEAN ABSOLUTE PERCENT ERROR): It measure the error in percentage term and it is very easy to interpret the data however it is useful for the high volume of data.

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