FORMULAE

L4
Forecast Measures
Mean Absolute Deviation (MAD)
1
MAD= |e |+|e2|+…+|e n|)
n( 1
Mean Squared Error (MSE)
1 2 2
MSE= ( e1 +e 2 +…+e 2n )
n
Mean Absolute Percentage Error (MAPE)

1 e1 e e
MAPE=
n (| | | | | |)
+ 2 + …+ n
A1 A 2 An

Judge bias of forecast by plotting a curve for cumulative error. Good forecast is unbiased.

Linear Regression

Multiplicative Holt-Winter Method

F t ,t +τ =( St + τ Gt ) c ❑t+ τ− N

At
St =α ( )
c t−N
+ ( 1−α ) ( S t−1 +G t −1 )

G t =β ( S t−St −1 ) + ( 1−β ) G t −1

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 At
c t =γ ( )
St
+ ( 1−γ ) ct −N

L7
Single Facility Location Problem
m
Minimize f ( X )=∑ wi d ( X , P i )
i=1

X =( x , y) Location of the new facility

Pi=( ai ,b i ) Location of existing facilities, i = 1, 2, 3, …, m

w i is the weight with existing facilities, such as traffic rate.

d ( X , Pi ) is the distance between new and existing facilities. Use rectilinear distance.
m
Minimize f ( X )=∑ wi (|x−ai|+| y −bi|)
i=1

m m
f ( x , y )=f 1 ( x )+ f 2 ( y )=∑ wi|x−ai|+ ∑ wi| y−bi|
i=1 i=1

Allocation Model
n m
MinimizeW =∑ ∑ z ji w ji d ( x j , P i )+ g ( n )
j=1 i=1

j is the number of new facilities.

i is the number of customers to be served.
n≤m
W is the total cost per unit time.
w ji is the cost per unit time per unit distance if new facility j interacts with existing facility.

z ji =1 if the new facility interacts with the existing facility i. 0 otherwise.

g(n) is the cost per unit time of providing n new facilities.

For m customers and n facilities, the number of possible alternatives
n−1
(−1 )k ( n−k )m
S ( x , y )=∑
k=0 k ! ( n−k ) !

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L9
Aggregate Planning

MPS (Master Production Schedule)

Projected on-hand Inventory = Previous week leftover inventory – this week requirement
This week requirement = max(Forecast, committed order)
For the 1st period: ATP = On-hand + MPS – Sum of Customer order before next MPS
Other periods with MPS: ATP = MPS – Sum of Customer order before next MPS

L10
MRP

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