Answered: What are the advantages and…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section: Chapter Questions

Problem 40P: The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels....

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What are the advantages and disadvantages of aggregating demand from a forecasting view? Are there other things that should be considered when going from multiple DCs to a DC?

Transcribed Image Text:Analytics Exercise: Forecasting Supply Chain Demand-Starbucks Corporation (LO18-2) As we discussed at the beginning of the chapter, Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the stores might appear to be very similar, they are actually very different. Depending on the location of the store, its size, and the profile of the customers served, Starbucks management configures the store offerings to take maximum advantage of the space available and customer preferences. Starbucks' actual distribution system is much more complex, but for the purpose of our exercise let's focus on a single item that is currently distributed through five distribution centers in the United States. Our item is a logo-branded coffeemaker that is sold at some of the larger retail stores. The coffeemaker has been a steady seller over the years due to its reliability and rugged construction. Starbucks does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 13 weeks is shown in the following table. The demand at the distribution centers (DCs) varies between about 40 units, on average, per week in Atlanta and 48 units in Dallas. The current quarter's data are pretty close to the demand shown in the table. Management would like you to experiment with some forecasting models to determine what should be used in a new system to be implemented. The new system is programmed to use one of two forecasting models: simple moving average or exponential smoothing. Week Atlanta 1 33 45 26 35 3 37 38 41 40 34 22 55 48 42 35 40 51 32 43 54 40 46 162 199 189 213 246 Total 2 Boston Chicago 44 Dallas 27 LA 4 5 55 46 7 8 9 18 58 55 18 72 62 28 27 64 70 65 55 74 40 35 45 288 245 204 236 6 30 48 47 62 10 37 44 95 43 38 257 11 12 13 23 55 40 30 45 50 35 45 47 38 47 42 48 56 50 174 248 229 Average 40 42 47 48 46 222

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