The Carbondale Hospital is considering the purchase of a new ambulance. The deci
ID: 351155 • Letter: T
Question
The Carbondale Hospital is considering the purchase of a new ambulance. The decision ill driven during the past 5 years are as follows: rest partly on the anticipated mileage to be driven next year. The miles Year Mileage 4,000 3,500 3,850 3,750 a) Using a 2-year moving average, the forecast for year 6 3800 miles (round your response to the nearest whole number) b) If a 2-year moving average is used to make the forecast, the MAD based on this 58.3 miles (round years of matched data.) your response to one dec mal pace Hint You mw have any eca 3 ual c) The forecast for year 6 using a weighted 2-year moving average with weights of 0.40 and 0.60 (the weight of 0.60 is for the most recent period)- 3790 miles (round your response to the nearest whole number). The MAD for the forecast developed using a weighted 2-year moving average with weights of 0.40 and 0 60miles (round your response to one decimal place). (Hint: You will have only 3 years of matched data.) ast ast ast.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 forecast for year 6 = (3850+3750)/2 = 7600/2 = 3800 miles.
b) Using the formula used in part a, the forecast for year 3 through 5 are
MAD = Sum of the absolute deviation for all the periods / number of periods
Where deviation = actual value - forecasted value
Absolute deviation = absolute value of deviation
Using the above formula the deviation and absolute deviation for year 3 through 5 are
MAD = (0+100+75)/3 = 175/3 = 58.3
C) Using a two period weighted moving average method the forecast for a period is calculated as the sum of the product of the actual value and their respective weights for the previous two periods.
So using this formula with weight of 0.60 and 0.40 the forecast for year 6 = (3850x0.40)+(3750x0.60) = 1540+2250 = 3790 miles.
d) Using the formula used in part c the forecast for year 3 through 5 are
Now the deviation and absolute deviation for year 3 through 5 are
MAD = (100+150+40)/3 = 290/3 = 96.7