The Carbondale Hospital is considering the purchase of a new ambulance. The deci
ID: 387571 • Letter: T
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
3,000
4,000
3,400
3,850
3,700
a) Using a 2-year moving average, the forecast for year 6 =3775
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 =____miles (round your response to one decimal place). (Hint: You will have only 3 years of matcheddata.)
Year
1
2
3
4
5
Mileage
3,000
4,000
3,400
3,850
3,700
Explanation / Answer
a) F(6) = (3850+3700)/2
= 3775
b) F(3) = (3000+4000)/2
= 3500
F(4) = (4000+3400)/2
= 3700
F(5) = (3400+3850)/2
= 3625
MAD = Sum of absolute Deviation/Number of Observations
MAD = |(100 + 150 + 75)|/3
= 325/3
= 108.34