Question

The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as​ follows:

Year 1 2 3 4 5

Mileage 3,050 4,000 3,500 3,800 3,750


Using a 2-year moving average, the forecast for year 6 (round your response to the nearest whole number)?.

Answer 1

3,775 miles

Explanation:

The simple moving average is a mean that takes into account only the last n values for a given n.

The formula is

`\large SMA=(v_1+v_2+...+v_n)/(n)`

where

`\large v_k` value observed in period k

n number of periods to be considered

In this case, as we want to use a 2-year moving average, we only consider the 2 last years, and then take the average.

So we have the forecast for year 6 would be

(3,800+3,750)/2 = 3,775