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Homework - Inventory Management

Homework - Inventory Management

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Published by Shinji
Inventory Management
Inventory Management

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Published by: Shinji on Aug 05, 2010
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02/25/2012

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CHAPTER 13FORECASTING
Review and Discussion Questions
1.What is the difference between dependent and independent demand?Independent demand is forecasted item demand that occurs separately from the demand for other items. Dependent demand is calculated from the demand for another item. Thedifference lies in the way the two demands are determined.6.What strategies are used by supermarkets, airlines, hospitals, banks, and cereal manufacturersto influence demand?Supermarkets—several sales items, free giveaway items (such as a pound of butter or a loaf of bread), an occasional “midnight madness” sale where the store is open late or even allnight.Airlines—excursion rates, age rates (senior citizens, children, youth fares), charter flights,off-season rates, exceptionally good meals (or no meals for further reduced prices), moreflights, tie-in with hotels or auto rental, and tour agencies for “package tours,” freechampagne, free stop-over at a third point, or new terminals.Hospitals—patients generally go to the hospital recommended by their physician. Therefore,hospitals offer free office space, nursing assistance, lab equipment, staff positions, and patient billing to physicians. Hospitals frequently advertise their occupancy rate and room rates,which tend to influence demand. Also, they could become a preferred provider organization.Banks—free gifts for new accounts, free checking, free safety deposit box, free financialadvice, “club memberships,” and free use of “executive lounges” for depositors in varioussize account ranges, community rooms for club meetings.Cereal manufacturers—TV advertising, sponsorship of some youth events, free prizes incereal boxed, using prime display space.7.All forecasting methods using exponential smoothing, adaptive smoothing, and exponentialsmoothing including trend require starting values to get the equations going. How would youselect the starting value for, say F
t-1
?Starting values can be simply an average of the early periods, or a guess. If the starting valueis taken some period back (as opposed to starting to use the equations on very recent data) theequation will have a chance to adjust as it is carried forward to today.8.From the choice of simple moving average, weighted moving average, exponentialsmoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why?Of these four choices, the weighted moving average is the most accurate, since specificweights can be placed in accordance with their importance. The other methods make
148
 
Chapter 13
assumptions, such as an average, straight line, or exponential curve. The weighted averagemay be modified to any form. If a long time span is taken, however, the weighted averagecan be cumbersome to use. In addition, as time periods pass, the user most likely would liketo change the weights. This would add to the difficulty of using the techniques for a largenumber of applications such as forecasting demand for inventory items.
Problems
1. b.
212128.7282052)(
21
==
=
n y
inii xy
= 269.85Therefore, 3 standard errors of the estimate would be 3(269.85) = 809.55 or 8102.a.F
July
= .60(15) + .30(16) + .10(12) = 15.0 b.F
July
= (15 + 16 + 12) / 3 = 14.3c.F
July
= F
June
+
α
(A
June
– F
June
) = 13 + .2(15-13) = 13.4
149
 
Forecasting
d.
xyxyx
2
112121211224315459412481651680256159036Total 218129791
 x
=3.5
 y
=13.5 b =
22
 xn x y xn xy
=0.77a =
 xb y
=10.8
Y = a + bx = 10.8 + .77xe.F
July
, where July is the 7
th
month.Y = a + bx = 10.8 + .77(7) = 16.23.a. F
t+1
= F
t
+
α
(A
t
– F
t
),
α
= .20
MonthDemandForecastAbsolute DeviationJanuary1008020February948410March1068620April809010May688820June948410Total90
 b.MAD = 90/6 = 15
150

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