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 Mileage

13,000

2 4,000

33,400

4 3,800

5 3,700

a Forcast the mileage for the next year using a 2-year moving average.

b. Find the MAD based on the 2-year moving average forecast in part a Hint: You will have only 3 years of matched data.

C. Use a weighted 2-year moving average with weights of .4 and .6 to forecast next year's mileage. The wieight of .6 is for the most recent year. What MAD results from using this approach to forecasting? Hint you will have only 3 years of matched data.

d. Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 3,000 miles and a = 5.

Explanation / Answer

a. mileage for the next year using a 2-year moving average = (3,800 + 3,700)/2 = 3750 c. weighted 2-year moving average = 0.6*3,700+ .4*3,800 = 3740

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