Explore BrainMass

# Forecasting Techniques: Moving Average and Exponential Smoothing

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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
1 3,000
2 4,000
3 3,400
4 3,800
5 3,700

a) Forecast the mileage for next year (6th year) using a 2 year moving average.
b) Find the MAD based on the 2 year moving average. (Hint; You will have only 3 years of matched data).
c) Use a weighted 2 year moving average with weights of .4 and .6 forecast next year's mileage. (The weight of .6 is for most recent year.) What MAD results from using this approach to forecasting? (Hint; You will have only 3 years of matched data).
d) Complete the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 3,000 miles and α = .5