1.

The Instant Paper Clip Office Supply Company sells and delivers office supplies to companies,
schools, and agencies within a 50-mile radius of its warehouse. The office supply business is
competitive, and the ability to deliver orders promptly is a big factor in getting new customers
and maintaining old ones. (Offices typically order not when they run low on supplies, but when
they completely run out. As a result, they need their orders immediately.) The manager of the
company wants to be certain that enough drivers and vehicles are available to deliver orders
promptly and that they have adequate inventory in stock. Therefore, the manager wants to be
able to forecast the demand for deliveries during the next month. From the records of previous
orders, management has accumulated the following data for the past 10 months:

Month Jan Feb Mar Apr May June July Aug Sep Oct
Orders 120 90 100 75 110 50 75 130 110 90

a. Compute the monthly demand forecast for February through November using the naive
method.
b. Compute the monthly demand forecast for April through November using a 3-month moving
average.
c. Compute the monthly demand forecast for June through November using a 5-month moving
average.
d. Compute the monthly demand forecast for April through November using a 3-month
weighted moving average. Use weights of 0.5, 0.33, and 0.17, with the heavier weights on the
more recent months.
e. Compute the mean absolute deviation for June through October for each of the methods
used. Which method would you use to forecast demand for November?

Template

Month Order Forecast

Naïve 3 month 5 month 3 month
method Moving Moving Weighed
average average average

MAD
2. PM Computer Services assembles customized personal computers from generic parts. Formed
and operated by part-time UMass Lowell students Paulette Tyler and Maureen Becker, the
company has had steady growth since it started. The company assembles computers mostly at
night, using part-time students. Paulette and Maureen purchase generic computer parts in
volume at a discount from a variety of sources whenever they see a good deal. Thus, they need
a good forecast of demand for their computers so that they will know how many parts to
purchase and stock. They have compiled demand data for the last 12 months as reported below.

a. Use exponential smoothing with smoothing parameter α = 0.3 to compute the demand
forecast for January (Period 13).
b. Use exponential smoothing with smoothing parameter α = 0.5 to compute the demand
forecast for January (Period 13).
c. Paulette believes that there is an upward trend in the demand. Use trend-adjusted
exponential smoothing with smoothing parameter α = 0.5 and trend parameter β = 0.3 to
compute the demand forecast for January (Period 13).
d. Compute the mean squared error for each of the methods used.

Template: for a,b,c

Exponential Exponential Trend adjusted exponential

smooth smooth smooth smoothing
parameter α = 0.5 and trend
parameter β = 0.3
Period Month Demand α = 0.3 α = 0.5 At Tt Ft
Template for d

Exponential smooth Exponential smooth Trend adj α = 0.5

and β = 0.3
Month Demand Σt Σ 2t Σt Σ 2t Σt Σ 2t

MSE MSE MSE MSE

3. Rafeeq LLC is in the business of Air conditioners service. The number of contracts they get each
month is listed below. Rafeeq wants to calculate the forecasted sales for the year 2020. Use the
trend projection method and forecast for the same.
i) Find the Linear forecasting equation
ii) Find the demand for 13th and 18th day.

Time Number of Contracts X2 xy

period (x) (y)
in Days
1 353 1 353
2 387 4 774
3 342 9 1026
4 374 16 1496
5 396 25 1980
6 409 36 2454
7 399 49 2793
8 412 64 3296
N= 9 408 81 3672
2
∑X = 45 ∑Y= 3480 ∑X = 285 ∑XY = 17844
X= 45/9 = 5 Y = 3480/9 = 386.67

B = 17844 – 9*5*386.67 = 17844-17400 = 444 = 7.4

285 – 9*52 285 – 225 60

A = 386.67 – 7.4*5 = 386.67 – 37 = 349.67

Therefore the required equation is: y = 349.67 + 7.4x

ii) Demand for 13th Day; x=13

y = 349.67 +7.4 * 13
y = 349.67 + 96.2 = 445.87 = 446

Demand for 18th day; x= 18

Y = 349.67 +7.4*18
Y = 349.67 + 133.2 = 482.87 = 483
 Time Number of Contracts X2 xy
period (x) (y)
in Month
1 – Jan 353 1 353
2- Feb 387 4 774
3 342 9 1026
4 374 16 1496
5 396 25 1980
6 409 36 2454
7 399 49 2793
8 412 64 3296
N= 9 - Sept 408 81 3672
2
∑X = 45 ∑Y= 3480 ∑X = 285 ∑XY = 17844
X= 45/9 = 5 Y = 3480/9 = 386.67

B = 17844 – 9*5*386.67 = 17844-17400 = 444 = 7.4

285 – 9*52 285 – 225 60

A = 386.67 – 7.4*5 = 386.67 – 37 = 349.67

Therefore the required equation is: y = 349.67 + 7.4x

For Jan 2020, x = 13

Year 2020 No of Contracts (y = 349.67 + 7.4x)

13(Jan) Y = 349.67 + 7.4*13 = 446
14(Feb) Y = 349.67 +7.4*14= 453
15 Y = 349.67 +7.4*15=460
16 Y = 349.67 +7.4*16=467
17 Y = 349.67 +7.4*17=474
18 (june) Y = 349.67 +7.4*18=481
19 Y = 349.67 +7.4*19=489
20 Y = 349.67 +7.4*20
21 Y = 349.67 +7.4*21
22 Y = 349.67 +7.4*22
23 Y = 349.67 +7.4*23
24(Dec 2020) Y = 349.67 +7.4*24
 Yea Applications received
r
1 185
2 190
3 175
4 169
5 177
6 159
7 165
8 155
9 163
10 145

i) Find the equation

ii) Find the Applications required for the year 15 and year 19.