Demand for emergency room services. With the advent of managed care, US hospitals have begun to operate like businesses. More than ever before, hospital administrators need to know and apply the theories and methods taught in business schools. Richmond Memorial Hospital in Richmond, Virginia, uses regression analysis to forecast the demand for emergency room services. Specifically, Richmond Memorial uses data on patient visits to the emergency room during each of the past 10 Augusts to forecast next August’s demand. Data for the month of August in a recent 10-year period are shown in the next table. ER SUPPLEMENTARY EXERCISES 14.58–14.72

a. Use a straight-line regression model to construct a point forecast for emergency room demand for each of the next three Augusts.

b. Provide 95% prediction intervals around the forecasts.

c. Describe the potential dangers associated with using simple linear regression to forecast demand for emergency room services. Year t Visits Daily Average Yt 1 1,36744.092 1,642 52.96 3 1,780 57.41 4 2,060 66.45 5 2,257 72.80 6 3,019 97.38 7 2,79490.128 2,846 91.80 9 3,001 96.80 10 3,548 114.45

d. Which other method described in this chapter would be appropriate for forecasting patient visits to the emergency room? Applying the Concepts—Intermediate