University Book Store Computer Purchase Program

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iii) University Book Store Student Computer Purchase Program

1. Background.

The Busy Biker is a bike shop located close to Tokyo University and owned by Nomura Hideki. He began the shop 20 years ago and sell new and second hand bicycle after fixing it too. The Business grew and demand continued to increase. Nomura must determine how many bicycles he need to have in stock at every beginning of semester. Below here is the data that help Nomura to forecast and to know how accurate will it be in assisting him in his business.

2. The Busy Biker Shop Data

|Year |Bikes Sold |
|1 |225 |
|2 |313 |
|3 |475 |
|4 |408 |
|5 |792 |
|6 |806 |
|7 |899 |
|8 |953 |
|9 |1,069 |
|10 |986 |
|11 |1,098 |
|12 |1,256 |
|13 |1,178 |
|14 |1,607 |
| |12,065 |

From the data’s above, Nomura will setup an analysis using the:

• 2, 3 and 4 month Average Methods

• Weighted Average Methods (0.5 & 0.5, 0.5, 0.4 & 0.1 and 0.5, 0.3 & 0.2),

• Alpha 0.5, 0.6 & 0.7 Methods.

• Regression/Linear Trend Methods.

Justification of using above methods is:

• Try and error method due to uncertainty in economics and demand in the future, the best result for each methods will be compared each other to produce the most reliable result.

• There’s no indication that more student will be accept (next year intake) by Tokyo University next year, so the demand are based only on historical data.

• No guarantee on price increased for next year period, this relates to demand and supply theory where when price are high so the demand will be fall.

• No further information’s provided about the business environment such as number of competitor or economics situation next year.

3. Next Year Demand.

Using the 2, 3 and 4 month Average Methods from the data.

|Items |Average 2 years |Average 3 years |Average 4 years | |Mean Absolute Deviations (MAD) |151.71 |186.58 |241.60 | |Average Error (E) |147.54 |186.58 |241.60 | |Next period values |1,393 |1,347 |1,285 |

Result:

For the MAD (Mean Absolute Deviations), result shows that it’s high and its sign that the data are not very accurate and it means the forecast figure are much different compare with actual figure. The average error result shows that the forecast figures are low.

For 2, 3 and 4 month Average Methods, Nomura will used the 2 years average because the result shows the lower MAD and E, others are not accurate and it’s not advisable to use it in the estimations.

Using the Weighted Average Methods from the data.

|Items |0.5 & 0.5 (Weight |0.5, 0.4 & |0.5, 0.3 & 0.1 | | |Average) |0.1(Weight Average) |(Weight Average) | |Mean Absolute Deviations (MAD) |151.71 |155.16 |163.55 | |Average Error (E) |147.54 |151.60 |160.97 |...
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