Reference no: EM131915676

Assignment

Part 1

1. Demand over past 3 months has been 250, 210, and 224 units. Using a three-month moving average, determine the forecast for month four. If the actual demand in month 4 is 264, calculate the forecast for month 5.

2. Given the following data, calculate the three-month moving average forecasts for months 4, 5, 6, and 7.

Month	Actual Demand	Forecast
1	65
2	80
3	50
4	45
5	60
6	70
7

3. If the forecast for May was 222, and the actual demand for May is 235, what would be the forecast for June if the smoothing constant (alpha) is .20? If June demand is actually 290, calculate forecast for July.

4. Given the following average demand, calculate the seasonal indices for each quarter:

Quarter	Average Demand	Seasonal Index
1	164
2	480
3	490
4	170
Total

Note that your answer, if calculated correctly, should have all of the seasonal indices add up to the number of quarters in the entire season.

5. Using the data in problem 4, and the seasonal indices you have calculated, calculate expected quarterly demand if the annual forecast is 2000 units.

Quarter	Seasonal Index	Forecast
1
2
3
4

6. Calculate the deseasonalized demands for the following:

Quarter	Annual Demand	Seasonal Index	Deseasonalized Demand
1	130	0.70
2	170	1.00
3	375	1.80
4	90	0.50
Total

7. For the following data, calculate the mean absolute deviation (MAD).

Period	Forecast	Actual Demand	Absolute Deviation
1	100	80
2	100	110
3	100	130
4	100	75
5	100	105
Total

8. A company uses a tracking signal trigger of + or - 4 to decide whether a forecast should be reviewed. Given the following history, determine in which period the forecast should be reviewed. Mean Absolute Deviation (MAD) for the item is 15. Is there any previous indication that the forecast should be reviewed?

Period	Forecast	Actual	Deviation	Cumulative Deviation	Tracking Signal
1	100	110
2	105	90
3	110	85
4	115	110
5	120	105
6	125	95

Part 2

1. A company is using a carrier to deliver goods to an important customer. The annual demand is $5,000,000 and the average transit time is 10 days. Another carrier promises delivery in 8 days. What is the reduction in transit inventory?

2. A florist carries an average inventory of $12,000 in cut (fresh) flowers. The flowers require special storage and are highly perishable. The florist estimates capital costs at 5%, storage costs at 20%, and risk costs at 40%. What is the annual carrying cost?

3. An importer operates a warehouse that has the following annual costs. Wages for purchasing are $30,000, purchasing expenses are $20,000, customs and brokerage costs are $20 per order, the cost of financing the inventory is 7%, storage costs are 5%, and the risk costs are 9%. The average inventory is $300,000, and 5,000 orders are placed in a year. What are the annual ordering and carrying costs?

4. Given the following data, calculate a level production plan, quarterly ending inventory, and average quarterly inventory. If inventory carrying costs are $4 per unit per quarter, what is the annual carrying cost? Opening and ending inventories are zero.

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Totals
Forecast Demand	5000	6000	9500	7500
Production
Ending Inventory
Average Inventory
Inventory Cost

5. If the annual cost of goods sold is $40,000,000 and the average inventory is $8,000,000:

a. What is the inventory turns ratio?

b. What would be the reduction in average inventory if, through better materials management, if the inventory turns ratio was increased to 10 times per year?

c. If the cost of carrying inventory is 10% of average inventory, what is the annual savings?

6. A company has 800 units on hand and the annual usage is 12,000 units. There are 250 working days per year. What is the days of supply?