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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
Heart Transplants
1
45
2
50
3
52
4
56
5
58
6
?
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 = 0.6
Year
1
2
3
4
5
6
A
45
50
52
56
58
?
Ft
41
43.4
47.4
50.2
53.7
56.3
| Error |
4.0
6.6
4.6
5.8
4.3
= 25.3
A
45
50
52
56
58
?
Ft
41
44.6
49.5
51.8
55.6
57.8
| Error |
4.0
5.4
2.5
4.2
2.4
= 18.5
b)
A
45
50
52
56
58
?
| Error |
(45 + 50 + 52) / 3 = 49
(50 + 52 + 56) / 3 = 52.7
(52 + 56 + 58) / 3 = 55.3
7
5.3
= 12.3
x
n
15 / 5 = 3
xy - nxy =
x nx
2
Demand (Y)
45
50
52
56
58
= 261
y 261 / 5 = 52.2
n
815 5(3)(52.2)
= 3.2
55 5(9)
a y - bx = 52.2
3.2(3) = 42.6
X2
1
4
9
16
25
= 55
XY
45
100
156
224
290
= 815
Year
(X)
1
2
3
4
5
6
Demand
Trend Projection
Forecast(Y)
| Error |
45
50
52
56
58
?
Y = 42.6 + 3.2(1)
Y = 42.6 + 3.2(2)
Y = 42.6 + 3.2(3)
Y = 42.6 + 3.2(4)
Y = 42.6 + 3.2(5)
Y = 42.6 + 3.2(6)
45.8
49.0
52.2
55.4
58.6
61.8
0.8
1.0
0.2
0.6
0.6
= 3.2
MAD
5.06
3.7
6.2
0.6
Based on the Mean Absolute Deviation criterion, trend projection is the best fit.
(5 marks)
4.19 Consulting income at Dr. Thomas W. Jones Associates for the period February to July
has been as follows. Use trend-adjusted exponential smoothing to forecast Augusts income.
Assume that the initial forecast for February is $65,000 and the initial trend adjustment is 0. The
smoothing constants selected are = .1 and = .2.
Forecast Ft = (At-1) + (1 - )(Ft-1 + Tt-1), Trend Tt = (Ft Ft-1) + (1 - )T t-1
Mo
Inc
Forecast
Trend
Feb
Mar
Apr
May
Jun
Jul
Aug
70.0
68.5
64.8
71.7
71.3
72.8
65.0
0.1(70)+0.9(65) = 65.5
0.1(68.5)+0.9(65.6) = 65.89
0.1(64.8)+0.9(66.05) = 65.93
0.1(71.7)+0.9(66.06) = 66.62
0.1(71.3)+0.9(66.87) = 67.31
0.1(72.8)+0.9(67.64) = 68.16
0
0.2(65.565)+(0.8)0 = 0.1
0.2(65.89-65.5)+(0.8)0.1 = 0.16
0.2(65.92-65.89)+(0.8)0.16 = 0.13
0.2(66.62-65.93)+(0.8)0.13 = 0.25
0.2(67.31-66.62)+(0.8)0.25 = 0.33
0.2(68.16-67.31)+(0.8)0.33 = 0.43
FIT
65+0 = 65
65.5+0.1=65.6
65.89+0.16=66.05
65.93+0.13=66.06
66.62+0.25=66.87
67.31+0.33=67.64
68.16+0.43=68.60
=
Err2
25.0
8.4
1.6
31.9
19.7
26.6
113.2
4.20 Resolve problem 4.19 with = .1 and = .8. Using MSE, which smoothing constants
provide a better forecast?
Mo
Inc
Forecast
Trend
Feb
Mar
Apr
May
Jun
Jul
70.0
68.5
64.8
71.7
71.3
72.8
65.0
0.1(70)+0.9(65) = 65.5
0.1(68.5)+0.9(65.9) = 66.16
0.1(64.8)+0.9(66.77) = 66.57
0.1(71.7)+0.9(67.02) = 67.49
0.1(71.3)+0.9(68.31) = 68.61
0
0.8(65.565)+(0.2)0 = 0.4
0.8(66.16-65.5)+(0.2)0.4 = 0.61
0.8(66.57-66.16)+(0.2)0.61 = 0.45
0.8(67.49-66.57)+(0.2)0.45 = 0.82
0.8(68.61-67.49)+(0.2)0.82 = 1.06
Err2
FIT
65+0 = 65
65.5+0.4=65.9
66.16+0.61=66.77
66.57+0.45=67.02
67.49+0.82=68.31
68.61+1.06=69.68
=
25.0
6.76
3.87
21.89
8.91
9.76
76.19
x
n
X2
4
1
16
25
9
= 55
Y
4
1
4
6
5
= 20
15 / 5 = 3
xy - nxy =
x nx
2
a y - bx = 4
y 20 / 5 = 4
n
70 5(3)( 4 )
= 1.0
55 5(9)
1(3) = 1.0
Y2
16
1
16
36
25
= 94
XY
8
1
16
30
15
= 70
r=
350 300
275 225 470 400 =
5(70) (15)(20)
5(55) 15 5(94) 20
2
50
50
=
= 0.845
50 70
59.16
(10 marks)
a y - b xy
n2
94 1(20 ) 1(70 )
=
52
1.333
= 1.15