Quantitative Analysis for Management, 13/e

Solved Problems

1. Solved Problem 5-1 Demand for patient surgery at Washington General Hospital has increased steadily in the past few years, as seen in the following table:

   YEAR	OUTPATIENT SURGERIES PERFORMED
   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 42 surgeries. Using exponential smoothing with a weight of $\alpha =0.20,$ develop forecasts for years 2 through 6. What is the MAD?

   Solution

   YEAR	ACTUAL	FORECAST (SMOOTHED)	ERROR	|ERROR|
   1	45	42	$\mathrm{+}$ 3	3
   2	50	$42.6=42+0.2\left(45-42\right)$	$\mathrm{+}$ 7.4	7.4
   3	52	$44.1=42.6+0.2\left(50-42.6\right)$	$\mathrm{+}$ 7.9	7.9
   4	56	$45.7=44.1+0.2\left(52-44.1\right)$	$\mathrm{+}$ 10.3	10.3
   5	58	$47.7=45.7+0.2\left(56-45.7\right)$	$\mathrm{+}$ 10.3	10.3
   6	—	$49.8=47.7+0.2\left(58-47.7\right)$	—	—
   $\text{MAD}=\frac{\sum |\text{Errors ...}}{}$