Question 1

The number of heart surgeries performed at UN hospital has increased steadily over the past several years. The hospitals 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. Six years ago, the forecast for year 1 was 4 surgeries.

Year	Demand
1	45
2	50
3	52
4	56
5	58

The hospital's administration is considering the following forecasting methods.

Exponential smoothing, with a= 0.6

Three-year moving average

Regression model, Y=42.6+3.2X, where Y is the number of surgeries and X is the index for the year. (E.g., X=1 for year 1, X=2 for year 2, etc)

a) If MAD is the performance criterion chosen by the administration, which forecasting method should it choose?

b) Determine the best forecast demand in year 6.