The human resources manager for a medium-sized business is interested in predicting the dollar value of medical expenditures filed by employees of her company for the year 2021. From her company' database she has collected the following information showing the dollar value of medical expenditures made by employees for the previous seven years: Year 2014 2015 2016 2017 2018 2019 2020 Medical Claims $405,642 $407,180 $408,203 $410,088 $411,085 $412,200 $414,044 a. Construct a time series plot. What type of pattern exists in the data'. b. Which forecasting technique do you think is most appropriate for this time series, moving average, single exponential smoothing, linear trend, or adjusted exponential smoothing? Why? (* c. Perform a linear trend analysis and use the resulting equation in the form of y = a + bt to produce a forecast for the medical claims data for the period 2014 to 2020. d. Use an a value of 0.25 to produce an exponential forecast for the medical claims data for the period 2014 to 2020 e. Compute the MAD value for your model in question (ii) and question (iii) for the years 2014 to 2020. (4 f. Provide a forecast for medical claim for year 2021 using the best model according to the MAD analysis in question (e). g. Redo question c and d using Excel. Show the Excel output.
The human resources manager for a medium-sized business is interested in predicting the dollar value of medical expenditures filed by employees of her company for the year 2021. From her company' database she has collected the following information showing the dollar value of medical expenditures made by employees for the previous seven years: Year 2014 2015 2016 2017 2018 2019 2020 Medical Claims $405,642 $407,180 $408,203 $410,088 $411,085 $412,200 $414,044 a. Construct a time series plot. What type of pattern exists in the data'. b. Which forecasting technique do you think is most appropriate for this time series, moving average, single exponential smoothing, linear trend, or adjusted exponential smoothing? Why? (* c. Perform a linear trend analysis and use the resulting equation in the form of y = a + bt to produce a forecast for the medical claims data for the period 2014 to 2020. d. Use an a value of 0.25 to produce an exponential forecast for the medical claims data for the period 2014 to 2020 e. Compute the MAD value for your model in question (ii) and question (iii) for the years 2014 to 2020. (4 f. Provide a forecast for medical claim for year 2021 using the best model according to the MAD analysis in question (e). g. Redo question c and d using Excel. Show the Excel output.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Transcribed Image Text:The human resources manager for a medium-sized business is interested in predicting the dollar
value of medical expenditures filed by employees of her company for the year 2021. From her
company' database she has collected the following information showing the dollar value of medical
expenditures made by employees for the previous seven years:
Year
2014
2015
2016
2017
2018
2019
2020
Medical Claims
$405,642 $407,180 $408,203
$410,088 $411,085 $412,200 $414,044
a. Construct a time series plot. What type of pattern exists in the data'.
b. Which forecasting technique do you think is most appropriate for this time series, moving average,
single exponential smoothing, linear trend, or adjusted exponential smoothing? Why? (*
c. Perform a linear trend analysis and use the resulting equation in the form of y = a + bt to produce
a forecast for the medical claims data for the period 2014 to 2020.
d. Use an a value of 0.25 to produce an exponential forecast for the medical claims data for the
period 2014 to 2020
e. Compute the MAD value for your model in question (ii) and question (iii) for the years 2014 to
2020. (4
f. Provide a forecast for medical claim for year 2021 using the best model according to the MAD
analysis in question (e).
g. Redo question c and d using Excel. Show the Excel output.
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