4.5The Carbondale Hospital is considering the purchase
of a new ambulance. Thedecision will rest partlyon the anticipated
mileage to bedriven nextyear. Themiles drivenduring the past5
yearsare asfollows:
Year Mileage
13,000
2 4,000
3 3,400
43,800
5 3,700
a)Forecast themileage for nextyearusing a 2 yearmoving average.
b)Findthe MAD basedon the 2 yearmoving average forecast in
part (a). (Hint:Youwill have only 3 yearsofmatched data.)
c) Use a weighted2 yearmoving average with weightsof .4 and.6
to forecast nextyear’s mileage. (The weight of .6 isfor themost
recentyear.) What MAD resultsfrom using thisapproach to
forecasting? (Hint:Youwill have only 3 yearsofmatched data.)
d) Compute the forecast foryear 6using exponentialsmoothing, an
initial forecast foryear 1 of3,000miles, anda= .5.