Forecasting and Cost

Topics: Forecasting, Regression analysis, Linear regression Pages: 20 (3434 words) Published: March 2, 2013
ADM 3301

Sample Mid-term Exam

Duration: 2.5 hours

Student name:_______________________Student No.__________________


1- Write down the exam copy number (that exists at the top right corner of this page) on the identification white card next to your name. 2-Verify that your exam has 9 pages (including this title page). 3-Answer all questions on your examination copy. Use the opposite (blank) side, if necessary. Answers or calculations written on the sheet of notes will not be evaluated. 4-Justify all answers with proper arguments and/or calculations. Be precise, clear and concise: ambiguous or vague statements will be considered false. Please write legibly. 5-This is a closed-book exam: however, one double sided sheet (8.5" x 11") of notes and a calculator are permitted for arithmetic use only. The sheet of notes must be handed over with the exam copy at the end of the exam period, or else your copy will not be marked. 6-NO COMMUNICATION DEVICES MAY BE WITHIN SIGHT DURING THE EXAM PERIOD.

| | | | | |Problems |Description |Marks |Result | | | | | | |1. Smith Machine Parts |Forecasting | | | |2. Independent Questions |Forecasting | | | |3. Product X |Forecasting | | | |4. Seaside Inc. |Aggregate Planning | | | |5. Tri-bike |Transportation | | | |6. Transportation Table |Transportation | | | | | | | | |Total | | | |

Question 1: Forecasting (9 marks)

Each Friday, Smith Machine Parts (SMP) LTD has to forecast the next week’s demand for brackets #357, #358 and #359. For many years, this has been done reasonably well by Joe Smith, who recently retired. When asked how he made his forecasts, Joe said (between puffs on his corn cob pipe), “Well, I looks at the bubbles on me beer, and I rubs me lucky rabbit foot, and the forecast comes to me maid.” SMP has asked three of its analysts to propose scientific forecasting systems to replace old Joe. The forecasters and the proposed methods are as follows:

A. Allen:three-week moving average
B. Black:exponential smoothing with ( = 0.2
C. Clark:simple linear regression using the previous 6 weeks of data

Each of the three forecasters has been assigned one bracket. The demand for the past six weeks (in thousands of brackets) is given below, as well as the forecasts obtained with the three suggested methods:

|Bracket #357 (three-week moving average): | |Bracket #358 (exp. smoothing with ( = 0.2): | |Week # |Demand |Forecast | |Week # |Demand |Forecast | | | | | | | |...
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