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Problem Set 4

Part 1

Develop a four-month moving average forecast for Wallace Garden Supply and compute the MAD.

A three-month moving average forecast was developed in the table attached.

MONTH SHED SALES 3 MONTH MOVING AVERAGE

January 10

February 12

March 13

April 16 (10 + 12+ 13)/3=11.67

May 19 (12+ 13+ 16)73 = 13.67

June 23 (13 + 16 + 19)73 = 16.00

July 26 (16+19 + 23)73= 19.33

August 30 (19 + 23 + 26)73 = 22.67

September 28 (23 + 26 + 30)73 = 26.33

October 18 (26 + 30 + 28)73 = 28.00

November 16 (30 + 28 + 18)73 = 25.33

December 14 (28 + 18 + 16)73 = 20.67

January — (18 + 16 +14)/3=16.00

Question 1

The four-month moving average forecast for Wallace Garden Supply is ___________. (Please round it to an integer and include no units.)

A.17

B.18

C.19

D.20

Question 2

The Mean Absolute Deviation (MAD) for the above forecast is _____. (Please round it to two decimal points.)

Part 2

Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the table attached. Develop a 3-year moving average to forecast sales. Then estimate demand again with a weighted moving average in which sales in the most recent year are given a weight of 2 and sales in the other 2 years are each given a weight of 1.

Question 3

The three-year moving average forecast for Wallace Garden Supply is ____. (Please round it to two decimal points and include no units.)

Question 4

The Mean Absolute Deviation (MAD) for the above moving average forecast is ____ . (Please round it to two decimal points.)

Question 5

The three-year weighted moving average forecast for Wallace Garden Supply is ____. (Please round it to an integer and include no units.)

Question 6

The Mean Absolute Deviation (MAD) for the above weighted moving average forecast is ____. (Please round it to two decimal points.)

Question 7

Based on your previous calculation, which method do you think is the best?

A. 3-year moving average.

B. 3-year weighted moving average.

Part 3

Sales of Cool-Man air conditioners have grown steadily during the past 5 years as shown in the attached table. The sales manager had predicted, before the business started, that year 1’s sales would be 410 air conditioners. Please use exponential smoothing with a weight of to answer the following questions.

Question 8

The starting /initial forecast for the sales of Cool-Man air conditioners is _________. (Please round it to an integer and include no units.)

A.400

B.410

C.430

D.450

Question 9

The Year 2 forecast for the sales of Cool-Man air conditioners is ____. (Please round it to an integer and include no units.)

Question 10

The Year 6 forecast for the sales of Cool-Man air conditioners is ____. (Please round it to two decimal points and include no units.)

Question 11

The Mean Absolute Deviation (MAD) for the above exponential smoothing forecast is ____. (Please round it to two decimal points.)

Problem Set 5 due Aug 2

Part 1

Lila Battle has determined that the annual demand for number 6 screws is 100,000 screws. Lila, who works in her brother’s hardware store, is in charge of purchasing. She estimates that it costs $10 every time an order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one screw in inventory for a year is one-half of 1 cent. Assume that the demand is constant throughout the year.

Question 1

To minimize total inventory cost, Lila should order ____ number 6 screws per order. (Please round to an integer and include no units.)

Question 2

Based on the calculation in Question 1, Lila needs to make _____ orders per year.

Question 3

Based on the calculation in Question 2, Lila’s total ordering cost is _____ per year. (Please round to a whole dollar.)

Question 4

Based on the calculation in Question 1, Lila’s average inventory is ______. (Please round to an integer and include no units.)

Question 5

Based on the calculation in Question 4, Lila’s total holding cost is _____ per year. (Please round to a whole dollar.)

Part 2

Shoe Shine is a local retail shoe store located on the north side of Centerville. Annual demand for a popular sandal is 500 pairs, and John Dirk, the owner of Shoe Shine, has been in the habit of ordering 100 pairs at a time. John estimates that the ordering cost is $10 per order. The cost of the sandal is $5 per pair.

Question 6

If the carry cost were 10% of the cost, then the optimal order quantity would be ______ pairs of sandal. (Please round to an integer and include no units.)

Question 7

If the optimal order quantity were 100 pairs of sandal, the carry cost should be ______ percent of the cost. (Please round to a whole percentage.)

Part 3

Ross White’s machine shop uses 2,500 brackets during the course of a year and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75. There are 250 working days per year.

Now, Ross White wants to reconsider his decision of buying the brackets and is considering making the brackets in-house. He has determined that setup costs would be $25 in machinist time and lost production time, and 50 brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor time and materials) of producing one bracket would be $14.80. The holding cost would be 10% of this cost.

Question 8

The daily demand rate for Rose White’s machine shop is _____. (Please round to an integer and include no units.)

Question 9

The optimal production quantity for Rose White’s machine shop is _____. (Please round to an integer and include no units.)

Question 10

Given the optimal production quantity calculated above, it will take _____ days for Rose White’s machine shop to produce the optimal production quantity. (Please round to one decimal point and include no units.)

Question 11

During the time producing the optimal quantity, (based on your calculation in Questions 8 and 10), there will be about _____ brackets sold. (Please round it to an integer and include no units.)

Question 12

If Rose uses the optimal production quantity calculated above in Question 9, the maximum inventory level would be ______, the average inventory level would be _____, and the annual holding cost would be ______. (Please round to an integer and include no units.)

Question 13

If Rose uses the optimal production quantity calculated above in Question 9, there would be about production runs each year. Hence, the total annual setup cost is and the total annual inventory cost, including the cost of production is _____. (Please round to an integer and include no units.)

Question 14

If the lead time is one-half day, the reorder point (ROP) is _____ units. (Please round to an integer and include no units.)