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	3,950	3,500	3,850	3,700

a) Using a 2-year moving average, the forecast for year 6 = _______ 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.

c) The forecast for year 6 using a weighted 2-year moving average with weights of 0.35 and 0.65 (the weight of 0.65 is for the most recent period) =_______ 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 0.35 and 0.65 = _______  miles (round your response to one decimal place). (Hint: You will have only 3 years of matched data.)

Answer 1

a) Forecast the mileage for next year (6th year) using a 2-year moving average.

(3850+3700)/2=3775

The forecasted mileage for the 6th year is 3775 miles

b) Year Mileage Forecast Difference

1 3050

2 3950

3   3500 3500 0

4 3850 3725    125

5 3700 3675 25

MAD = 0+125+25/3 = 50 miles

MAD = 50 miles

c) Forecasts next years mileage = 3752

Year Mileage Forecast Error Absolute

1 3050

2 3900

  3 3500 3602 -102 102

4 3850 3640 210 210

5 3700 3727 -27 27

6   3752

MAD = 102+210+27/3 = 339/3

MAD = 113