Statistics

MSB 701 Quiz 2

Each question is worth 20 points… Make sure you are as detailed as possible with questions #1 and #3…

1. In your own words , what is the importance of Inventory Control? What are the 6 assumptions the Economic Order Quantity? What becomes important for managers if the instantaneous assumption is not considered? Please be as detailed as you can be with each part (questions within question – please type your answer).

2. Given the following Quantity Discount Schedule

Discount Number	Discount quantity	Discount %	Discount cost ($)
1	0 to 199	0	40
2	200 to 499	2.5	To be completed
3	500 to 999	3	To be completed
4	1000 or more	3.5	To be completed

If the normal cost per unit is $ 40, the ordering cost per order is $30; the annual demand is 4500 units, and the holding cost is 35% of the cost per unit. What order quantity will minimize the total inventory cost? Please show all work

3. In your own words , please talk in general detail about the different types of Qualitative Forecasting methods. Please look beyond my notes to answer this… There are a lot of material pertaining to this that is researchable. (please Type your answer)

4. Christina motor Company uses 8100 (Yearly Demand) air filters during the span of a year, and this usage is relatively constant throughout the year. These air filter are bought from a supplier 200 miles away for $45 each, and it takes 6 days from ordering to receipt. The carrying cost per unit per year is 15% of the unit cost and the ordering cost per order is $27.50. There are 300 working days per year.

a. What is the Economic Order Quantity (round to the nearest whole number)?

b. What is the average inventory?

c. About how many orders per year would be placed (round to the nearest whole number)?

d. What is the total Annual inventory cost (Not just the total annual ordering and holding, but also including purchased cost of air filter)?

e. What is the Lead time?

f. What is the Re-ordering point?

5. Please select 12 sale values of your choice and enter these values in the “Actual Sale values “column. Complete the remaining columns table below using given forecasting Method.

A. For each method, Compute MADs, MSEs, and MAPEs

B. Which smoothing method is the best? Why?

You can use Excel to work this question out

period	Actual sales	Naive forecast	forecast error	abs(forecast error)	square error	error/actual	Abs(error/actual)
1
2
3
4
5
6
7
8
9
10
11
12
				MAD	MSE		MAPE
period	Actual sales	3 period moving average	forecast error	abs(forecast error)	square error	error/actual	Abs(error/actual)
1
2
3
4
5
6
7
8
9
10
11
12
				MAD	MSE		MAPE
period		3 period centered moving average	forecast error	abs(forecast error)	square error	error/actual	Abs(error/actual)
1
2
3
4
5
6
7
8
9
10
11
12
				MAD	MSE		MAPE
period (t)	Actual sales	3 period weighted moving average	forecast error	abs(forecast error)	square error	error/actual	Abs(error/actual)
1		0.10(weight for t-3)
2		0.30(weight for t-2)
3		0.60(weight for t-1)
4
5
6
7
8
9
10
11
12
				MAD	MSE		MAPE
period	Actual sales	exponential smoothing with alpha = .35	forecast error	abs(forecast error)	square error	error/actual	Abs(error/actual)
1
2
3
4
5
6
7
8
9
10
11
12
				MAD	MSE		MAPE