Concept explainers
Develop an exponential smoothing
The Hartley-Davis motorcycle dealer in the Minneapolis–St. Paul area wants to be able to forecast accurately the demand for the Roadhog Super motorcycle during the next month. From sales records, the dealer has accumulated the data in the following table for the past year.
- a. Compute a three-month moving average forecast of demand for April through January (of the next year).
- b. Compute a five-month moving average forecast for June through January.
- c. Compare the two forecasts computed in parts (a) and (b) using MAD. Which one should the dealer use for January of the next year?
Want to see the full answer?
Check out a sample textbook solutionChapter 12 Solutions
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
Additional Business Textbook Solutions
Operations Management: Processes and Supply Chains (11th Edition)
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Operations Management: Sustainability and Supply Chain Management (12th Edition)
Operations Management
Business in Action
Operations Management, Binder Ready Version: An Integrated Approach
- Under what conditions might a firm use multiple forecasting methods?arrow_forwardScenario 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?arrow_forwardScenario 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?arrow_forward
- Please use an exponential smoothing method with a=.3 and a 2011 forecast of 35 to forecast the mileage for 2013? Keep two decimal places.arrow_forwardSales of tablet computers at Ted Glickman’s electron-ics store in Washington, D.C., over the past 10 weeks are shown in the table below: a) Forecast demand for each week, including week 10, usingexponential smoothing with a 5 .5 (initial forecast 5 20). b) Compute the MAD.c) Compute the tracking signal.arrow_forwardin order to forecast a demand pattern that has a significant trend but no seasonality you can use both double exponential smoothing and regression. what is the advantage of using double exponential smoothing over regression?arrow_forward
- The forecasts generated by two forecasting methods and actual sales have been collected in the Microsoft Excel Online file below. Use the Microsoft Excel Online file below to develop forecast accuracy and answer the following question. Forecast Accuracy Measures Forecast 1 Period Sales Forecast Error Absolute Error Error^2 Abs. % Error 1 271 276 2 285 263 3 290 286 4 276 288 5 266 269 6 268 267 7 265 261 8 270 268 Total Average RSFE MAD MSE MAPE Tracking Signal 1. What is the MAD, the MSE, the MAPE, the RSFE, and the tracking signal for each forecasting method? Do not round intermediate calculations. Round your answers to two decimal places. Use the minus sign to enter negative values, if any. 2. What can be concluded about the quality of the forecasts 1? Assume that the control limit for the tracking signal…arrow_forwardAlvin Cheah is a marketing analyst for Rockstar Travel Company. He wants to analyze the trend of international tourist arrival in Tawau by using international tourist arrival rate and flight delayed rate over the past 10 years as given in Table 2 below: (Hint: Provides your answers in two decimal points) (i) Propose ONE (1) forecasting model that can be used by Alvin. Why would you proposed that particular model? (ii) Develop the forecasting model that you suggest in (i). Briefly explain your model.arrow_forwardSales of Volkswagen's popular Beetle have grown steadily at auto dealerships in Nevada during the past 5 years (see table below). Using exponential smoothing with a smoothing constant (α) of 0.30 and a starting forecast of 415.00, the following sales forecast has been developed: Year Sales Forecasted Sales 2005 455 415.00 2006 502 427.00 2007 518 449.50 2008 563 470.05 2009 584 497.94 Part 2 The MAD for a forecast developed using exponential smoothing with α = 0.30 is enter your response here sales (round your response to two decimal places). Part 3 Forecasted sales for years 2006 through 2010 using exponential smoothing with α = 0.60 and a starting forecast of 415.00 are (round your responses to two decimal places): Year 2005 2006 2007 2008 2009 2010 Forecasted Sales 415.00 enter your response here enter…arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningPractical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Contemporary MarketingMarketingISBN:9780357033777Author:Louis E. Boone, David L. KurtzPublisher:Cengage Learning
- MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational Publishing