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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.

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