Operations and Supply Chain Management The Core

82 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
7. The following table contains the demand from the last 10 months:
MONTH
ACTUAL
DEMAND
MONTH
ACTUAL
DEMAND
1
2
3
4
5
31
34
33
35
37
6
7
8
9
10
36
38
40
40
41
a. Calculate the single exponential smoothing forecast for these data using an α
of 0.30 and an initial forecast (F 1 ) of 31.
b. Calculate the exponential smoothing with trend forecast for these data using
an α of 0.30, a δ of 0.30, an initial trend forecast (T 1 ) of 1, and an initial
exponentially smoothed forecast (F 1 ) of 30.
c. Calculate the mean absolute deviation (MAD) for each forecast. Which is best?
8. Actual demand for a product for the past three months was
Three months ago
Two months ago
Last month
400 units
350 units
325 units
a. Using a simple three-month moving average, make a forecast for this month.
b. If 300 units were actually demanded this month, what would your forecast be
for next month?
c. Using simple exponential smoothing, what would your forecast be for this
month if the exponentially smoothed forecast for three months ago was 450
units and the smoothing constant was 0.20?
9. Assume an initial starting F t of 300 units, a trend (T t ) of eight units, an alpha of
0.30, and a delta of 0.40. If actual demand turned out to be 288, calculate the
forecast for the next period.
10. The number of cases of merlot wine sold by the Connor Owen winery in an eightyear
period is as follows:
YEAR CASES OF MERLOT WINE YEAR CASES OF MERLOT WINE
1
2
3
4
270
356
398
456
5
6
7
8
358
500
410
376
Using an exponential smoothing model with an alpha value of 0.20, estimate the
smoothed value calculated as of the end of year 8. Use the average demand for
years 1 through 3 as your initial forecast, and then smooth the forecast forward to
year 8.
11. Not all the items in your office supply store are evenly distributed as far as
demand is concerned, so you decide to forecast demand to help plan your stock.
Past data for legal-sized yellow tablets for the month of August are
Week 1
Week 2
300
400
Week 3
Week 4
600
700
a. Using a three-week moving average, what would you forecast the next week
to be?
b. Using exponential smoothing with α = 0.20, if the exponential forecast for
week 3 was estimated as the average of the first two weeks [(300 + 400)/2
= 350], what would you forecast week 5 to be?