The Carbondale Hospital is considering thepurchase of a new ambulance. The decision will rest partly on theanticipated mileage to be driven next year. The miles driven duringthe past 5 years are as follows.
Year Mileage
1 2,900
2 4,000
3 3,200
4 4,400
5 3,700
(a) Forecast the mileage for next year using a2-year moving average.
(b) Find the MAD for your forecast in part(a).
(c) Use a weighted 2-year moving average withweights of .4 and .6 to forecast next year's mileage. (Theweight of .6 is for the most recent year.)
What is the MAD of this forecast?
(d) Compute the forecast for year 6 usingexponential smoothing, an initial forecast for year 1 of 2,900miles.