UNIVERSITY OF TECHNOLOGY, JAMAICA

COLLEGE: BUSINESS AND MANAGEMENT

SCHOOL: BUSINESS ADMINISTRATION

ASSIGMENT/TEST 1: Semester 2 2022/2023

Module Name: Supply Chain Management

Module Code: POM 4010

Theory/ Practical: Theory

Groups: BBA4

Issue Date: March 02, 2023

Due Date

Stephen Halstead

1906937

Hervin Rowe
INSTRUCTIONS: This exam contains 3 questions. You are required to do ALL
questions

You have 2 hours to complete and upload this exam.

Completed scripts must be uploaded to Moodle in the drop box labeled with your
TUTOR’S NAME

Responses should be done in the exam paper, below each question

Answers should be typed using 12 point font in Microsoft Word

Drawings and graphs may be done by hand and a picture uploaded in the required area
of the question

No pdf files will be accepted

This is an individual assignment. Students who cheat by exchanging answers will be

penalized

Due Date and time:

Late uploads will not be accepted

If you encounter problems with submission of your exam papers. You should screenshot
the error page from Moodle. Included in that screenshot should be your name and/or ID
number

Please Ensure your Name and ID number as well as your TUTOR’s name is written on
your response paper in the space provided above
QUESTION 1 (20 marks)

a) Elite Furnishings of Jamaica owns and operates twelve Furniture Distribution Centers
across The Caribbean Islands. There signature item is a Mahogany textured kitchen
counter accompanied by a Granite counter top. Sales (X, in millions of dollars) is related
to Profits (Y, in hundreds of thousands of dollars) by the regression equation

Y = 4.21 + 0.5 X.

Determine the forecast of profit for a store with sales of $20 million and $30 million
respectively. (4 marks)

Y = 4.21 + 0.5 X. Y = 4.21 + 0.5 X

Y = 4.21 + 0.5 (20,000,000) Y = 4.21 + 0.5 (30,000,000)

Y = 4.21 + 10,000,000 Y = 4.21 + 15,000,000

Y = 10,000,004.21 Y = 15,000,004.21

b) The Forecasting unit at a local department store has tracked the sales of a product over
the last ten weeks and has obtained data as shown in table 1.

i Forecast demand using exponential smoothing with an alpha of 0.4, and an

initial forecast of 28.0 for period 1. (8
marks)
Exponential
smoothing =
Period Demand 0.4
1 24 28
28+.40(24-28)
2 23 = 26.4
26.4+.4(23-
3 26 26.4) = 25.04
25.04+.4(26-
4 36 25.04) = 25.42
5 26 29.65
6 30 28.19
7 32 28.91
8 26 30.15
9 25 28.49
10 28 27.09

ii Calculate the MAD . (3 marks)

Exponential MAD
smoothing =
Period Demand 0.4
1 24 28 24 – 28 =4
28+.40(24-28) 23 – 26.4 =
2 23 = 26.4 3.4
26.4+.4(23- 26 – 25.04 =
3 26 26.4) = 25.04 0.96
4 36 25.04+.4(26- 36 – 25.42 =
 25.04) = 25.42 10.58
5 26 29.65 3.65
6 30 28.19 1.81
7 32 28.91 3.09
8 26 30.15 4.15
9 25 28.49 3.49
10 28 27.09 .91
MAD = 3.604

iii If the manager at Elite believes that an Alpha value of 0.3 would be more
appropriate. What recommendations would you give the manager? (5
marks)

It is advisable to utilize a smoothing constant that is no greater than 0.2 if as long as

you have a strong understanding of the underlying demand pattern. In general, it
is ideal to select smoothing constants from MSE, MAD, and MAPE that reduce
the error term that you are most at ease with. However, the optimum smoothing
constants to choose are those that minimize the MSE in the absence of a
preference for any particular error terms.

Table 1
Period Demand
1 24
2 23
3 26
4 36
5 26
6 30
7 32
8 26
9 25
10 28

QUESTION 2 (10 marks)

Discuss the differences of push and pull supply chain processes.

When it comes on to pull processes, execution begins in response to a customer order while push
processes are initiated in anticipation of customer orders based on a forecast. Pull processes are
also referred to as reactive processes because they react to customer demand. Push processes
may also be referred to as speculative processes because they respond to forecasts, rather than
actual demand.

Since the client demand is unknown, push processes function in a volatile environment.
Customer demand is known in the setting where pull processes work. Yet, they are frequently
limited by choices made regarding inventory and capacity during the push phase. The pull
process consists of the Customer Order Cycle while the push process consists of the
Procurement, Manufacturing, and Replenishment Cycle. Both processes are separated by when
the customer order arrives. Therefore, pull processes are performed in response to a customer
order, whereas push processes are performed in anticipation of customer orders.
QUESTION 3 (20 marks)

Based on the data collected from 30 shops island-wide by the producers of a new brand of
vegetable loaf as at December 2010, the regression analysis was run which produced the
summary output below:

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.952413257
R Square 0.907091012
Adjusted R
Square 0.675425058
Standard Error 1.767131177
Observations 30

ANOVA
Significance
Df SS MS F F
5.78000
Regression 4 135.9587 33.98968 0 0.000241546
Residual 25 46.84129 3.122753
Total 29 182.8

Standard
Coefficients Error t Stat P-value Lower 95%
Intercept -4,650.0001 2.002465 1.07E-07 20.4256009
0.00219
X Variable 1 -20.0005248 19.50003 2 -0.1340466
0.67158
X Variable 2 30.0001546 1.400000 2 -0.2092916
0.00975
X Variable 3 6.95000038 0.080001 2 -0.12816526
X Variable 4 0.3000075 0.220010 0.23738 -0.02444292
 1

Given:

Q = Quantity sold per month

X1  P(in cents) = Price of the product = 900

X2  Py (in cents) = Price of leading competitor’s product = 850

X3  I (in dollars) = per capita income of the persons in the area in which the shops are located
= 16,500.

X4  E (in dollars) = Monthly advertising expenditure = 10,000

Using the information above,

a) Develop the linear regression model for the Quantity of Vegetable Loaves demand
per month.

Y = -4640 – 20(.900)+30(.850)+6.950(16500)+0.300(10,000)

b) What is the quality of the model (estimator) developed?

Y = 4640 – 18 + 25.5 + 114675 + 3000

Y = 113,042.50

c) What is the relationship and the strength of the relationship between

Demand for the Vegetable Loaves and the Independent Variables as a

group?

d) Compute the t-statistics for each variable and state whether it is statistically

significant at the 5% level.

Y = a + b1x1 + b2x2 + b3x3 + b4x4

e) Forecast the Demand for Vegetable Loaves using the model developed in

part a), based on the given information.

End of Test