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Ass2Ans

# Ass2Ans - Mgt 2070 Assignment 2 Solutions 4.13 As you can...

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Mgt 2070 Assignment 2 – Solutions 4.13 As you can see in the following table, demand for heart transplant surgery at Washington General Hospital has increased steadily in the past few years: Year 1 2 3 4 5 6 Heart Transplants 45 50 52 56 58 ? The director of medical services predicted 6 years ago that demand in year 1 would be 41 surgeries. a) Use exponential smoothing, first with a smoothing constant of .6 and then with one of .9, to develop forecasts for years 2 through 6. Exponential Smoothing α = 0.6 Year A F t = F t-1 + α (A t-1 – F t-1 ) Ft | Error | 1 45 41 (given in question) 41 4.0 2 50 41.0 + 0.6(45 - 41) 43.4 6.6 3 52 43.4 + 0.6(50 – 43.4) 47.4 4.6 4 56 47.4 + 0.6(52 – 47.4) 50.2 5.8 5 58 50.2 + 0.6(56 – 50.2) 53.7 4.3 6 ? 53.7 + 0.6(58 – 53.7) 56.3 Σ = 25.3 MAD = 25.3 / 5 = 5.06 (5 marks) Exponential Smoothing α = 0.9 Year A F t = F t-1 + α (A t-1 – F t-1 ) Ft | Error | 1 45 41 (given in question) 41 4.0 2 50 41.0 + 0.9(45 - 41) 44.6 5.4 3 52 44.6 + 0.9(50 – 44.6) 49.5 2.5 4 56 49.5 + 0.9(52 – 49.5) 51.8 4.2 5 58 51.8 + 0.9(56 – 51.8) 55.6 2.4 6 ? 55.6 + 0.9(58 – 55.6) 57.8 Σ = 18.5 MAD = 18.5 / 5 = 3.7 (5 marks)

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b) Use a 3-year moving average to forecast demand in years 4, 5, and 6.
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