Chapter 8, Problem 12P

The number of heart surgeries performed at Heartville General Hospital has increased steadily over the past several years. The hospital’s administration is seeking the best method to forecast the demand for such surgeries in year 6. The data for the past 5 years are shown.

The hospital’s administration is considering the following forecasting methods. Begin error measurement in year 3 so all methods are compared for the same years.

1. Exponential smoothing, with $\alpha =0.6$. Let the initial forecast for year 1 be 45, the same as the actual demand.
2. Exponential smoothing, with $\alpha =0.9$. Let the initial forecast for year I be 45, the same as the actual demand.
3. Trend project ion with regression.
4. Two-year moving average.
5. Two-year weighted moving average, using weights 0.6 and 0.4, with more recent data given more weight.
6. If MAD is the performance criterion chosen by the administration, which forecasting method should it choose?
7. If MSE is the performance criterion chosen by the administration, which forecasting method should it choose?
8. If MAPE is the performance criterion chosen by the administration, which forecasting method should it choose?