# Operational Management

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• Topic: Economic order quantity, Forecasting, Exponential smoothing
• Pages : 3 (339 words )
• Published : December 8, 2011

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1. Repeatable periods of ups and downs over short periods of time are called ____. a.Trends
b.Seasonal patterns
c.Regression patterns
d.Irregular variation

2. Given a prior forecast demand value of 230, a related actual demand value of 250 and a smoothing constant alpha of 0.1, what is the exponential smoothing forecast value for the following period? a. 230

b. 232
c. 238
d. 248

3. Which of the following is not a component of holding cost? a.Taxes
b.Insurance
c.Material handling
d.Order processing

4. Larger orders result in higher total holding cost but lower total ordering cost.

ANS:T

5. In general, total ordering costs are equal to total inventory holding cost for the optimal solution to the EOQ model.

ANS:T1

6. Using the data below, find the EOQ, the total annual cost associated with the economic order quantity, and the reorder point.

Annual Demand:8,000 units
Weeks Operating:52/year
Ordering Cost:\$35/order
Holding Cost:\$4/unit/year

ANS:

Q* = Sq. root of (2  8000  35/4) = 374

TC = 0.5(374)(4) + (8000/374)(35) = 748 + 748 = \$1496 (to within rounding)

To find the reorder point, note that the weekly demand is 8000/52 = 153.85. During the 3-week lead time we anticipate 3(153.85) = 462 (rounded) units to be sold.

7.MAD, MSE, and MAPE forecast error metrics generally give similar numerical results so it doesn't matter which one is used.

ANS:F

8.____ forecasts are needed to plan for facility expansion. a.Long-range
b.Intermediate-range
c.Short-range
d.Demand planning

9.Which of the following is not a statistical method?
a.Delphi
b.Exponential smoothing
c.Moving average
d.Linear regression

ANS:A

10. In a bill of materials, each component is comprised of one or more parent items.

ANS:F

11. A bill of materials characterizes the structure of dependent demand among all items that comprise a finished good.

ANS:T