Khyber Teaching Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the last five years are as follows. Year 1 2 3 4 5 Mileage 4,000 5,000 4,400 4,800 4,700 Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 4,000 miles and α = 0.5

Khyber Teaching Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the last five years are as follows. Year 1 2 3 4 5 Mileage 4,000 5,000 4,400 4,800 4,700 Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 4,000 miles and α = 0.5

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.2: Elements Of Decision Analysis

Problem 2P

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon spawn during a 24-hour period and must be canned immediately. Tinkan has the following agreement with the salmon industry. The company can deliver as many cans as it chooses. Then the salmon are caught. For each can by which Tinkan falls short of the salmon industrys needs, the company pays the industry a 2 penalty. Cans cost Tinkan 1 to produce and are sold by Tinkan for 2 per can. If any cans are left over, they are returned to Tinkan and the company reimburses the industry 2 for each extra can. These extra cans are put in storage for next year. Each year a can is held in storage, a carrying cost equal to 20% of the cans production cost is incurred. It is well known that the number of salmon harvested during a year is strongly related to the number of salmon harvested the previous year. In fact, using past data, Tinkan estimates that the harvest size in year t, Ht (measured in the number of cans required), is related to the harvest size in the previous year, Ht1, by the equation Ht = Ht1et where et is normally distributed with mean 1.02 and standard deviation 0.10. Tinkan plans to use the following production strategy. For some value of x, it produces enough cans at the beginning of year t to bring its inventory up to x+Ht, where Ht is the predicted harvest size in year t. Then it delivers these cans to the salmon industry. For example, if it uses x = 100,000, the predicted harvest size is 500,000 cans, and 80,000 cans are already in inventory, then Tinkan produces and delivers 520,000 cans. Given that the harvest size for the previous year was 550,000 cans, use simulation to help Tinkan develop a production strategy that maximizes its expected profit over the next 20 years. Assume that the company begins year 1 with an initial inventory of 300,000 cans.
a) The demand forecast for Month 6 would be: A. 565 haircuts B. 574 haircuts C. 578 haircuts D. 584 haircuts b) With Mean Absolute Deviation (MAD) as the criterion, the best forecasting model for this time series data is: A. Naïve approach B. 2-week Simple Moving Average (SMA) C. Weighted Moving Average (WMA) with weights: 0.5, 0.3, 0.2 D. Exponential Smoothing (ES) with alpha = 0.8
Demand for haircut at PogiPoints Barber Shop has increased steadily for the past few months as seen in the following time series data. Do the necessary computations and choose the best answer that would complete each statement. With weights of 0.5, 0.3, and 0.2, the WMA forecast for Month 6 would be: * A. 565 haircuts B. 574 haircuts C. 578 haircuts D. 584 haircuts
Khyber Teaching Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the last five years are as follows.Year 1 2 3 4 5Mileage 4,000 5,000 4,400 4,800 4,700a) Forecast the mileage for next year using a two year moving average. b) Find the MAD for your forecast in part 1.c) Use a weighted two year moving average with weights of 0.4 and 0.6 to forecast next year mileage. What is the MAD of this forecast?d) Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 4,000 miles and α = 0.5
Simple exponential smoothing (with a 0.2) is beingused to forecast monthly beer sales at Gordon’s LiquorStore. After observing April’s demand, the predicted demandfor May is 4,000 cans of beer.a At the beginning of May, what is the prediction forJuly’s beer sales?b Actual demand during May and June is as follows:May, 4,500 cans of beer; June, 3,500 cans of beer. Afterobserving June’s demand, what is the forecast for July’sdemand?c The demand during May and June averages out to 4,5002 3,500 4,000 cans per month. This is the same asthe forecast for monthly sales before we observed theMay and June data. Yet after observing the May andJune demands for beer, our forecast for July demand hasdecreased from what it was at the end of April. Why?
a) The 2-month Simple Moving Average (SMA) forecast for Month 6 would be: A. 565 haircuts B. 574 haircuts C. 578 haircuts D. 584 haircuts b) With weights of 0.5, 0.3, and 0.2, the Weighted Moving Average (WMA) forecast for Month 6 would be: A. 565 haircuts B. 574 haircuts C. 578 haircuts D. 584 haircuts c) With alpha = 0.8, the Exponential Smoothing (ES) forecast for Month 6 would be: A. 565 haircuts B. 574 haircuts C. 578 haircuts D. 584 haircuts
Problem 6-01 (Algorithmic) Consider the following time series data. Week 1 2 3 4 5 6 Value 18 14 15 11 18 13 Using the naïve method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy. Mean absolute error. If required, round your answer to one decimal place.fill in the blank 1 Mean squared error. If required, round your answer to one decimal place.fill in the blank 2 Mean absolute percentage error. If required, round your intermediate calculations and final answer to two decimal places.fill in the blank 3% What is the forecast for week 7? If required, round your answer to two decimal place.fill in the blank 4
Suppose a four-period weighted average is being used to forecast demand. Weights for the periods are as follows: wt-4 = 0.1, wt-3 = 0.2, wt-2 = 0.3 and wt-1 = 0.4. Demand observed in the previous four periods was as follows: At-4 = 380, At-3 = 410, At-2 = 390, and At-1 = 400. What will be the demand forecast for period t?
Data collected on the yearly registration for a Six Sigma seminar at the Quality College are shown in the following table: Year Registrations (000) 1 4 2 6 3 4 4 5 5 10 6 8 7 7 8 9 9 12 10 14 11 15 Develop a 4-year moving average to forecast registrations from year 5 to year 12. Estimate demand again for years 5 to 12 within a 4-year weighted moving average in which registrations in the most recent year are given a weight of 3 and 2, and registrations in the other 2 years are each given a weight of 1. Compute the forecasts for each year using exponential smoothing, with an initial forecast for year 5 of 8. Use α = 0.3. Using MAD, which of the three forecasting methods is best? Using MAPE, which of the three forecasting methods is best? Forecast registrations for year 15, using trend projection.
The following table shows the actual demand observed over the last 11 years: Year 1 2 3 4 5 6 7 8 9 10 11 Demand 6 8 4 7 11 7 13 12 10 13 8 This exercise contains only parts b, c, and d. Part 2 b) Using the 3-year moving average, provide the forecast from periods 4 through 12 (round your responses to one decimal place). Part 3 c) Using the 3-year weighted moving average with weights 0.10, 0.30, and 0.60, using 0.60 for the most recent period, provide the forecast from periods 4 through 12 (round your responses to two decimal places). Part 4 d) Mean absolute deviation for the forecast developed…