Assignment Solution Operations Management

(b) [i] Naive The coming January = December = 23 [ii] 3-month moving (20 + 21 + 23)/3 = 21.33 [iii] 6-month weighted [(0.1 17) + (.1 18) + (0.1 20) + (0.2 20) + (0.2 21) + (0.3 23)]/1.0
= 20.6 [iv] Exponential smoothing with alpha = 0.3

[v] Trend Forecast = 15.73 + .38(13) = 20.67, where next January is the 13th month. (c) Only trend provides an equation that can extend beyond one month

4.23 Students must determine the naive forecast for the four months. The naive forecast for March is the February actual of 83, etc. (a) | | Actual | Forecast | |Error| | |% Error| | | March | 101 | 120 | 19 | 100 (19/101) = 18.81% | | April | 96 | 114 | 18 | 100 (18/96) = 18.75% | | May | 89 | 110 | 21 | 100 (21/89) = 23.60% | | June | 108 | 108 | 0 | 100 (0/108) = 0% | | | | | | 58 | | | 61.16% |

(b) | | Actual | Naive | |Error| | |% Error| | | March | 101 | 83 | 18 | 100 (18/101) = 17.82% | | April | 96 | 101 | 5 | 100 (5/96) = 5.21% | | May | 89 | 96 | 7 | 100 (7/89) = 7.87% | | June | 108 | 89 | 19 | 100 (19/108) = 17.59% | | | | | | 49 | | | 48.49% | |

Naive outperforms management.

4.27 | Winter | Spring | Summer | Fall | 2004 | 1,400 | 1,500 | 1,000 | 600 | 2005 | 1,200 | 1,400 | 2,100 | 750 | 2006 | 1,000 | 1,600 | 2,000 | 650 | 2007 | 900 | 1,500 | 1,900 | 500 | | 4,500 | 6,000 | 7,000 | 2,500 |

3.31

Then y = a + bx, where y = number sold, x = price, and

So at x = 1.80, y = 1,454.6 – 277.6($1.80) = 954.90. Now round to the nearest integer: Answer: 955