This because the occupancy rate has been gradually increasing over the past months
Solution
3-month moving average forecast:
August: (7 + 12 + 10) / 3 = 9.0
September: (12 + 10 + 11) / 3 = 10.7
Compute a 5-month moving average forecast of demand for June through January.
Month Wheelchair Sales
May 7
June 12
November 14
December 16
August: (8+7+12+10+11)/5 = 9.6
September: (7+12+10+11+12)/5 = 10.2
Compare the two forecasts of the 3-month and 5-month using MAD. Which forecast method should the dealer use?
3-Month Forecast:
April 8
May 7
October 10
November 14
February 7
March 10
August 11
September 12
2. The Big City Hospital has experienced the following occupancy rates during the past 9 months:
| Month | Occupancy Rate (%) |
|---|---|
| 1 | 83 |
| 2 | 78 |
| 3 | 75 |
| 4 | 81 |
| 5 | 86 |
| 6 | 85 |
| 7 | 89 |
| 8 | 90 |
| 9 | 86 |
Forecast for month 10 = 83% + (0.2 * (78% - 83%)) = 82.6%
Forecast for month 11 = 82.6% + (0.2 * (75% - 82.6%)) = 81.2%
Forecast for month 16 = 86.0% + (0.2 * (90% - 86.0%)) = 86.2%
Compute the exponential smoothing forecast with alpha=.2 and beta=.3 (you can use the results of first part and just add beta calculation)
The three forecasts are:
Forecast 1: The occupancy rate will be 80% for the next month.