Operations and Supply Chain Management The Core

FORECASTING chapter 3 83
12. Assume that your stock of sales merchandise is maintained based on the forecast
demand. If the distributor’s sales personnel call on the first day of each month,
compute your forecast sales by each of the three methods requested here.
June
July
August
ACTUAL
140
180
170
a. Using a simple three-month moving average, what is the forecast for
September?
b. Using a weighted moving average, what is the forecast for September with
weights of 0.20, 0.30, and 0.50 for June, July, and August, respectively?
c. Using single exponential smoothing and assuming that the forecast for June
had been 130, forecast sales for September with a smoothing constant alpha
of 0.30.
13. Historical demand for a product is as follows:
DEMAND
April
May
June
July
August
September
60
55
75
60
80
75
a. Using a simple four-month moving average, calculate a forecast for October.
b. Using single exponential smoothing with α = 0.2 and a September
forecast = 65, calculate a forecast for October.
c. Using simple linear regression, calculate the trend line for the historical data.
Let’s say the X axis is April = 1, May = 2, and so on, while the Y axis is demand.
d. Calculate a forecast for October using your regression formula.
14. Demand for stereo headphones and music players for joggers has caused Nina
Industries to grow almost 50 percent over the past year. The number of joggers
continues to expand, so Nina expects demand for headsets to also expand,
because, as yet, no safety laws have been passed to prevent joggers from wearing
them. Demand for the players for last year was as follows:
MONTH
DEMAND
(UNITS)
MONTH
DEMAND
(UNITS)
January
February
March
April
May
June
4,200
4,300
4,000
4,400
5,000
4,700
July
August
September
October
November
December
5,300
4,900
5,400
5,700
6,300
6,000
a. Using linear regression analysis, what would you estimate demand to be for
each month next year? Using a spreadsheet, follow the general format in
Exhibit 3.7. Compare your results to those obtained by using the FORECAST
spreadsheet function.
b. To be reasonably confident of meeting demand, Nina decides to use three
standard errors of estimate for safety. How many additional units should be
held to meet this level of confidence?