Operations Management

National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows:

 Month

Sales (000)Units

  Feb.

19

  Mar.

19

  Apr.

13

  May.

25

  Jun.

16

  Jul.

23

  Aug.

23

b.

Forecast September sales volume using each of the following:

(1)

A linear trend equation.(Round your intermediate calculations and final answer to 2 decimal places.)

 Yt

thousands  

(2)

A five-month moving average. (Round your answer to 2 decimal places.)

  Moving average

thousands  

(3)

Exponential smoothing with a smoothing constant equal to .40, assuming a March forecast of 16(000). (Round your intermediate forecast values and final answer to 2 decimal places)

  Forecast

thousands  

(4)

The naive approach.

   Naive approach

thousands  

(5)

A weighted average using .60 for August, .20 for July, and .20 for June. (Round your answer to 2 decimal places.)

  Weighted average

thousands  

Freight car loadings over an 18-week period at a busy port are as follows:

Week

Number

Week

Number

Week

Number

1

280

7

350

13

545

2

295

8

400

14

555

3

310

9

450

15

585

4

295

10

435

16

600

5

310

11

485

17

615

6

320

12

535

18

630

a.

Determine a linear trend line for expected freight car loadings. (Do not round intermediate calculations.  Round your final answers to 2 decimal places.)

   = + t

b.

Use the above trend equation to predict expected loadings for Weeks 20 & 21. (Round your final answers to 2 decimal places.)

The forecasted demand for Week 20 is and for Week 21 is .

c.

The manager intends to install new equipment when the volume exceeds 860 loadings per week. Assuming the current trend continues, in which week (at the earliest) should the loading volume reach that level?  Use the rounded answers, as required, from any previous part of this problem.  Do not round any other intermediate calculations.  Round your final answer to 2 decimal places.

  It should reach 860 loadings in Week .

An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is Ft = 127 + 2.1t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your answers to 2 decimal places.)

t

Units Sold

11

145

12

150

13

148

14

143

15

154

16

149

17

152

18

156

19

158

20

164

  MAD (Naive)

  MAD (Linear)

  MSE (Naive)

  MSE (Linear)

[Linear Trend or Naive Method]   provides forecasts with less average error and less average squared error.