Please Help The Carbondale Hospital is considering the purchase of a new ambulan
ID: 389930 • Letter: P
Question
Please Help
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 3,050 3,950 3,450 3,750 3,750 a) Using a 2-year moving average, the forecast for year 6 3750 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 deolmal place). (Hint You will have only 3 years of matched data)Explanation / Answer
a) Using a two period moving average method the forecast for a period is calculated as the sum of the actual value for the previous two periods / 2
So forecast for year 6 = (3750+3750)/2 = 7500/2 = 3750 miles
b) Using the two year moving average method the forecast for year 3 through 5 are
MAD = Sum of the absolute deviation for all the periods/number of periods
Where,absolute deviation = absolute value of deviation
Deviation = Actual value - forecasted value
So the deviation and absolute deviation for year 3 through 5 are
MAD = (100+50+150) / 3 = 300/3 = 100.0 miles