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:

Year   1   2   3   4   5
Mileage   3,050   4,050   3,500   3,850   3,750

3 comma 0503,050

4 comma 0504,050

3 comma 5003,500

3 comma 8503,850

3 comma 7503,750

a) Using a 2-year moving average, the forecast for year 6 = miles (round your response to the nearest whole number).

3 comma 0503,050

4 comma 0504,050

3 comma 5003,500

3 comma 8503,850

3 comma 7503,750

Explanation / Answer

a) A two period moving average method averages the actual value for the previous two periods to generate the forecast for the next period. This can be calculated as the sum of the actual value for the previous two periods /2

So using the above formula the two year moving average forecast for year 6 = (milage in year 4 + milage in year 5) /2

= (3850 + 3750) / 2

= 7600 / 2

= 3800

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