Q5)

Moving Average is a statistical method that can help in calculating the overall trend in a
data set (ACCA Global, n.d.). 3-Period and 4-Period averages are used to calculate the
forecasts for the mentioned Periods.

Formula: Ft+1 = ΣAt /N

Where,
Ft+1 is The Sales Forecast for the period
At is the Actual Demand observed during the last period
N is the number of last periods

A)

Month Unit Sales Figure 3 period avg 4 period avg

January 14
February 16
march 23
april 25
may 24
june - 24 22

3 period moving average:

Ft+1= unit sales (March+April+May) = 23+25+24 = 24
N(3) 3

4 Period Moving avg:

Ft+1= unit sales (February+March+April+May) = 16+23+25+24 = 22
N(4) 4
 B)

Month Unit Sales 3 Period Avg 4 Period Avg

January 14

February 16

March 23

April 25

May 24

June 20

July 23 23

3 period moving average:

Ft+1= unit sales (April+May+june) = 25+24+20 = 23
N(3) 3

4 Period Moving avg:

Ft+1= unit sales (March+April+May+June) = 23+25+24+20 = 23
N(4) 4
 C) Exponential Smoothing is a method of forecasting for time series data to support
systematic or seasonal components (Brownlee, 2018).

Formula: Ft+1 = ⍺At + (1-⍺)Ft

Where,
Ft+1 is The Sales Forecast for the period
⍺ is the smoothing constant
At is the previous period’s actual value
Ft is the previous period’s forecasted value

Month Actual Sales Exponential Exponential

Smoothing Smoothing
(⍺=0.1) (⍺=0.6)
January 14
----- -----
February 16
----- -----
March 23
----- -----
April 25
----- -----
May 24 23 23

June 20 23.1 23.6

July 22.8 21.4

Forecast for June taking ⍺= 0.1

Ft+1 = 0.1*24+0.9*23= 2.4+20.7= 23.1

Forecast for June taking ⍺= 0.6

Ft+1 =0.6*24+0.4*23= 14.4+9.2= 23.6

Forecast for July taking ⍺= 0.1

Ft+1 = 0.1*20+0.9*23.1= 2+20.79= 22.8

Forecast for July taking ⍺= 0.6

Ft+1 = 0.6*20+0.4*23.6= 12+9.44=21.4

D) Forecasting refers to the process of formulating smart predictions of future scenarios in a
firm’s operations. Its main benefit lies in the fact that it can enable managers at a firm to
make well-informed decisions and in turn help a firm to be prepared for whatever is expected
to come (Armstrong, 2001). There are three principles of forecasting:
 Forecasts are often imperfect
It is impossible to accurately predict what can be expected from the future. Therefore,
forecasting can never be perfect. Errors are a part of forecasting and while they cannot
be eliminated, they can be minimized on an average. This is what makes forecasting
good enough to base important decisions on it.
 Forecasts for grouped data tends to be more accurate than for individual items
This is because the values of individual items can be anywhere on the scale and
generally in grouped data, the highs and lows of these individual items can be
neutralized. This makes grouped data relatively more stable than individual items and
can yield a better, more accurate forecast. For instance, forecasting the demand of a
particular mesh t-shirt would always be more prone to errors than forecasting the
demand of all the t-shirts together (O’Reilly, 2012).
 Forecasting for longer time periods leads to inaccuracy than when it is done for
shorter time periods
Longer time periods tend to offer increased uncertainty and instability. Therefore,
forecasting often ends up inaccurate when predicted over a long-time horizon.
Whereas, data usually does not drastically change over a short time, making
forecasting more accurate and reliable.

Due to the error-prone nature of forecasting, a firm can often end up in a situation where
there is under- or over-forecasting of the future demands. Under-forecasting refers to when
the future demand for a product is estimated lower than actual, whereas over-forecasting
refers to the overestimation of demand. Both can have major repercussions and throw the
firm’s supply chain off-balance, amongst many other implications of inaccurate forecasting.
Under-forecasting can lead to under-preparation and in turn, limited capacity of a firm to
meet with the demand in a given time. This can lead to unsatisfied customers who expect
their shipments on-time. Ultimately, these customers often decide to take their demand to
some other firm with better operations. It can be very expensive for a company to meet with
unanticipated production changes and in an attempt to increase capacity in a short time, a
firm might end up spending more money and resources (Reflex Business Planning, 2020). On
the other hand, over-forecasting can prove costly to a firm, too. Overstocking often leads to
costs associated with storage, risk, and opportunity, and can lead to a situation where storage
has to be outsourced. It can lead to inefficiency in warehousing operations, causing more
damage to the manufactured products amongst many things (Tompkins Solutions, 2014).
Therefore, it can be concluded that forecasts can be beneficial if done accurately as
inaccuracy in forecasts can have disastrous repercussions for a firm.
Q3)

A) Designing processes refers to the curation of a process ideal for producing the required
quantity and quality of products in a cost-effective manner. It does so by helping in the
development of a thorough plan for manufacturing that acts as a scaffold on which all
production operations are based (ICMR India, N.d.). There are many factors that can
influence the selection of a process design like the nature of the demand, product and volume
flexibility, required quality, etc. Based on these factors, a production strategy can be decided
that contributes to the development of a process design. Generally, there are three main
production strategies —Make-to-stock, Make-to-order, and Assemble-to-order.
 Make-to-stock (MTS) Strategy
In this production strategy, planning and scheduling of manufacturing is based on the
forecasted demand for the product. The forecasted demand for the product dictates
how much stock a firm using MTS must produce in advance to meet with the demand.
It is also called the push supply chain strategy as the products are pushed to the
customers. For instance, a video game company, PlayStation, assesses the success of
consoles that were manufactured previously to determine their confidence in the
future demand. Recently, the company implemented the MTS strategy for the launch
of PlayStation 5. They were prepared beforehand and did not wait until the last
minute to assess the nature of the demand but produced millions of consoles before
their launch (Optessa, N.d.).
 Make-to-order (MTO) Strategy
MTO strategy involves the manufacturing of products from scratch when an order is
received. It is also called the pull supply chain strategy as it waits for the consumer
demand to decide what products the firm has to sell and in how much quantity. This
production strategy is mainly implemented by companies that produce niche products
as it allows them to customize the product based of the consumer’s demand (Indeed,
2022). For instance, a German luxury car manufacturer, BMW, gives the choice to
consumers to customize their car by letting them design the interior, exterior, engine,
etc. BMW starts the production of these customizable cars only when the customer
places an order and the customer understands that it may be a time-taking process. If
the customer does not want to go through that waiting time, BMW also manufactures
ready to purchase cars (Market Business News, 2022). This type of production is also
 ideal for products that are expensive to keep inventory like computer servers and
automobiles.
 Assemble-to-order (ATO) Strategy
ATO strategy refers to a production workflow wherein the components of a product
are manufactured based on the forecasted demand but assembled only after the
consumers place an order. It is essentially a combination of the MTS strategy and the
MTO strategy. It makes use of a process similar to MTS to manufacture the product
components but responds to orders through a process similar to MTO (Cuofano,
2022). It exploits the benefit of the other two strategies by shortening lead times while
also leaving a room for personalization of products. For instance, a computer
manufacturer company, Dell, allows its customers to design their own computer by
offering choices for each component of the computer including processors, monitors,
and other software and hardware components. The company keeps a stock of these
computer components and only assembles them into a computer according to the
customization requested by the customer in their order (Corporate Finance Institute,
2022).

B)

Job Job Time (in Days Until Due EDD Rule LPT Rule
days)
A 10 29 B D

B 5 9 F A

C 9 23 C C

D 11 39 E E

E 8 25 A F

F 7 14 D B

LPT:
 Job Job Time(in days) Days Until Completion Lateness Tardiness
Due Time/job
flowtime
D 11 39 11 -28 0

A 10 29 21 -8 0

C 9 23 30 7 7

E 8 25 38 13 13

F 7 14 45 31 31

B 5 9 50 41 41

Σ= 50 Σ=195

Performance Measures:

Total Job Flowtime 195

Makespan 50
Mean Job Flowtime 32.50
Avg no. of Jobs 3.90
Mean Lateness 9.33
Mean Tardiness 15.33

Calculations:

 Makespan: time it takes to finish a batch of jobs = 50

Mean job flowtime = Σjob flow times/number of jobs

11+21+30+38+45+50 = 195 = 32.50 Days

6 6
Average number of jobs in the system: Σjob flow times/number of days to complete batch

11+21+30+38+45+50 = 195 = 3.90 jobs

50 50

Mean job lateness: Σjob lateness/number of jobs

(-28)+(-8)+7+13+31+41 = 56 = 9.33
6 6

Mean job tardiness: Σjob tardiness/number of jobs

0+0+7+13+31+41 = 92 = 15.33
6 6

Q6)
A) Fundamentally, supply chain management refers to the management of the trajectory of
products, data, and finances, starting from the procurement of raw materials to the shipping
of the end product to the consumer. Its activities include procurement, product management,
supply chain planning (inventory and capacity planning), logistics, and order management
(Oracle, N.d.).
A supply chain is nothing but the entire process of transforming raw materials into final
products which are then delivered to the end consumers. Typically, a supply chain consists of
five components —suppliers, manufacturers, wholesalers, retailers, and consumers.
 Suppliers
Suppliers refer to the organizations that supply products or parts of a product to a
firm. They are essentially the organizations that provide either final products or raw
materials to a firm for its manufacturing needs and thereby play a crucial role in the
beginning of any supply chain (Solistica, 2022).
 Manufacturers
Manufacturers are the organizations that transform the raw materials from suppliers
into finished goods. The manufacturing process can either be an internal function of a
firm or outsourced. The resulting finished goods from this component of the supply
chain are processed and packaged by a firm, and then handed over to the next
component, i.e., wholesalers/warehousers (Mhugos, 2021).
 Wholesalers
Wholesalers are organizations that purchase the final products from the manufacturers
and sell them to the retailers in large quantities and low prices. Alternatively, a firm
can also seek warehousers to store their end products for later sales (Quickbooks,
2022).
 Retailers
Retailers are organizations or individuals that purchase the final products from the
wholesalers in large quantities at a low price and sells them to the end customers.
They are a crucial component for the efficient fulfillment of the supply chain
processes and directly interact with customers to identify new demands which are
communicated to the manufacturers (Lopienski, 2021).
 Customers
Customers are the purchasers of the finished goods produced by a supply chain. The
whole supply chain is designed to meet their demand. They play the most important
role in the creation or modification of any supply chain (Achilles, N.d.).
 Product Suppliers

Manufacturers

Information and
Wholesalers
Monetary Flow

Retailers

Customers

b)
The bullwhip effect refers to a situation wherein slight changes in demand at the retailer’s
end become amplified in the opposite direction of the supply chain from the retailer’s end to
the manufacturer’s end. In such a situation, the variability between orders to the suppliers and
the sales to the end consumers increases. This phenomenon arises when a retailer alters the
quantity of ordered goods based on a slight change in consumer demand. Unaware of the
degree of demand shift, the wholesaler ends up ordering the product in larger or smaller
quantities from the manufacturer and the manufacturer being even lesser in the loop, ends up
placing an even larger or smaller order from the suppliers (Reiff, 2022). Such a scenario can
have disastrous implications for the efficiency of the supply chain. It can lead to a firm
reconsidering their demand forecasts and either increase or decrease their inventory of the
product. This in turn leads to the firm carrying excess or lack of inventory, both of which can
be expensive to the company. Moreover, it can lead to unfulfillment of orders, customer
dissatisfaction, decreased revenue, supplier-manufacturer mistrust, and a plethora of other
issues that can massively hurt the supply chain of a firm which then becomes difficult to
manage (Ohio University, 2022).
This anomaly in the supply chain is usually caused because of these common issues:
 Inaccurate data interpretation for forecasting demand at the retailer’s end who then
sends the wrong message up the supply chain-
To resolve this issue, retailers must be encouraged to make use of a more effective
forecasting method that offers a more thorough interpretation of data. The data could
also be communicated along with the forecast during the information flow up the
supply chain to cancel out unnoticed errors (MasterClass, 2022).
 Communication gap between the retailer and the wholesaler which inhibits the retailer
to correct its forecast and inform the wholesaler-
The operations management in each component of the supply chain should be more
aware and vigilant so that communication can be monitored and encouraged (Lee, et
al., 2007).
 Unanticipated changes in demand that makes inaccurate forecasting inevitable-
In this case, all components of the supply chain must remain in strong communication
of the accurate demand changes each of them is aware of. This should be done fast for
efficiency of the supply chain (Georgiev, N.d.).

Q4)
A) Level strategy of capacity planning refers to maintaining the capacity or manufacture
at a constant level over a period, irrespective of the fluctuations in demand. This
strategy works on the principle that during a low demand, overproduction would
result, and the extra stock thus obtained can be used to meet with the increase in
demand later. On the other hand, Chase strategy of capacity planning refers to
constantly altering the production based on the recent demand. As opposed to the
level strategy that is stringent, chase strategy requires much more flexibility in the
supply chain (Gordon, 2022). The disadvantage of the level strategy is the inventory
costs and outdatedness of products incurred by overproduction while the chase
strategy has the downside of associated risks in terms of supply, increased costs of
rapid production, and chaos. However, both strategies have their own benefits to offer
based on the type of products a firm produces. Generally, level strategy is not the best
approach for firms that provide a service or manufacture products that are perishable
 whereas, chase strategy can do well for such firms. Level strategy can be great for a
firm that is attracted to the many benefits it has to offer like steadiness in employment
processes and process utilization, better customer satisfaction due to the ability to
respond to special customer requests and shorter lead times, and improved quality of
products due to the ability to spare time to examine products before they are shipped
(Milano, 2021). Compared to the benefits of level strategy, the chase strategy often
means instability in labor and equipment due to fluctuations in production based on
changing demand and the capacity ends up largely dependent on the ability of the
supplier to provide required raw materials. However, it is a great approach when
inventory costs need to be mitigated and the products cannot be stored (ERP, 2022).

b)
Demand management refers to the adjustment of the demand such that it can be in line with
the available capacity. There are many strategies that can help in achieving this. These
include price fluctuations, selectively marketing the products with greater capacity,
redirecting capacity to produce an alternative product that is in demand, and value addition in
operations that can help in shifting the demand to a product (Jenkins, 2022). A hotel in
Phoenix, Ritz Carlton Hotel applies the demand management approach to increase the
demand over the off-peak season by hosting various special events, sports events, weddings,
etc., to encourage more customers to stay at the hotel during this period (Rao, 2019).
Similarly, restaurants usually have a decreased demand over the weekdays and to battle this,
many restaurants offer special deals, happy hours, and discounts to increase walk-ins. In a
different scenario, most restaurants when experiencing a backlog of a specific dish offer
alternative dishes with better deals to shift the demand and ensure customer satisfaction
(Business Government NZ, 2020).