Assignment Solution Operations Management

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(b) [i] NaiveThe coming January = December = 23
[ii] 3-month moving   (20 + 21 + 23)/3 = 21.33
[iii] 6-month weighted [(0.1 17) + (.1 18)
    + (0.1 20) + (0.2 20)
   + (0.2 21) + (0.3 23)]/1.0
= 20.6
[iv] Exponential smoothing with alpha = 0.3

[v] Trend 

Forecast = 15.73 + .38(13) = 20.67, where next January
is the 13th month.
(c) Only trend provides an equation that can extend beyond one month

4.23 Students must determine the naive forecast for the four months. The naive forecast for March is the February actual of 83, etc. (a)| | Actual| Forecast| |Error|| |% Error||
| March| 101| 120| 19| 100 (19/101) = 18.81%|
| April|  96| 114| 18| 100 (18/96)  = 18.75%|
| May|  89| 110| 21| 100 (21/89)  = 23.60%|
| June| 108| 108|  0| 100 (0/108)  =   0%|
| | | | | 58| | | 61.16%|

(b)| | Actual| Naive| |Error|| |% Error||
| March| 101|  83| 18| 100 (18/101) =17.82%|
| April|  96| 101|  5| 100 (5/96)   =5.21%|
| May|  89|  96|  7| 100 (7/89)   = 7.87%| | June| 108|  89| 19| 100 (19/108) = 17.59%|
| | | | | 49| | | 48.49%| |

Naive outperforms management.

4.27
| Winter| Spring| Summer| Fall|
2004| 1,400| 1,500| 1,000| 600|
2005| 1,200| 1,400| 2,100| 750|
2006| 1,000| 1,600| 2,000| 650|
2007| 900| 1,500| 1,900| 500|
| 4,500| 6,000| 7,000| 2,500|

3.31

Then y = a + bx, where y = number sold, x = price, and

So at x = 1.80, y = 1,454.6 – 277.6($1.80) = 954.90. Now round to the nearest integer: Answer: 955 lattes.
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