Question

In: Economics

Metropolitan Hospital has estimated its average monthly bed needs, N, as: N=460+5XN=460+5X where X = time...

Metropolitan Hospital has estimated its average monthly bed needs, N, as:

N=460+5XN=460+5X

where X = time period (months); (January 2002 = 0)

Assume that no new hospital additions are expected in the area in the foreseeable future. The following monthly seasonal adjustment factors have been estimated, using data from the past five years:

Forecast Metropolitan's bed demand for January, April, July, November, and December 2007.

Month

Adjustment Factor (%)

Forecast

January +5 760/798/724
April -15 912/775/659
July +4 790/822/760
November -5 810/770/853
December -25 1087/815/611

Suppose the following actual and forecast values for June bed demands have been recorded.

Year

Forecast

Actual

2007 785 801
2006 725 776
2005 665 685
2004 605 653
2003 545 567
2002 485 529

What seasonal adjustment factor would you recommend be used in making future June forecasts?

3.4%

5.5%

0.7%

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