Determine the initial estimates of level

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Reference no: EM132263907

Operational Research Techniques Assignment - Forecasting and Inventory control

Learning Outcomes -

Solve a range of business decision problems using appropriate software, analyse the output, and interpret the results in the context.
Identify and apply appropriate inventory control models.
Analyse seasonal and non seasonal time series data using appropriate forecasting methods.

Questions -

Q1. A bookstore manager compiled the following sales data for the last three years of bookstore operation.

Month	2016	2017	2018
January	726	789	846
February	705	714	765
March	696	741	795
April	534	579	615
May	552	579	630
June	420	447	480
July	435	471	498
August	456	483	522
September	330	366	378
October	390	390	444
November	456	501	519
December	618	690	705

(a) Use the data obtained in years 2016 and 2017 to determine the initial estimates of level, trend and all seasonal factors. Explain how you calculated the initial estimates.

(b) Use the Exponential Smoothing with Trend and Seasonality to forecast the books' sales on monthly basis in 2018. Assume that smoothing constants for level α, trend β, and seasonality γ, are all equal to 0.3. Implement the method using Excel.

Forecast the book sales for February, 2019.

Select one row in the table which refers to any month in 2018 and explain how you calculated the level, trend and seasonal factor for that month and how you calculated the forecast for the following month. Which formula you used?

Also, explain how you calculated the forecasts for February, 2019 and which formula you used.

Q2. A local university purchases exercise books to give to their students. Instead of a fixed unit cost, their supplier quotes the following discount pricing:

Order quantity	Unit Price
0 - 5000	£3.00
5001 - 10000	£2.96
10001 and over	£2.92

An annual holding cost is estimated to be 20% of the purchase price. The university incurs a fixed order placement, transportation and receiving cost of £100 each time an order is placed, regardless of the order quantity. Annual demand for the exercise books is 10000.

The discount for the 10001-unit minimum order quantity looks tempting. However, realising that higher order quantities result in higher inventory holding cost, the university should prepare a through cost analysis before making a final ordering recommendation.

Determine the quantity of exercise books the university should order each time it makes an order in such a way as to minimise the total cost incurred.

Reference no: EM132263907

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Reviews

len2263907

3/22/2019 11:42:59 PM

Submission arrangement online via CUMoodle: File types and method of recording: Hard copy submission. Task and Mark distribution: Forecasting problem - (a) Initialisation - 11 marks and (b) Application of the forecasting method - 19 marks. Inventory control problem - 20 marks.

len2263907

3/22/2019 11:42:53 PM

Notes: You are expected to use the CUHarvard referencing format. For support and advice on how this students can contact Centre for Academic Writing (CAW). Please notify your registry course support team and module leader for disability support. The University cannot take responsibility for any coursework lost or corrupted on disks, laptops or personal computer. Students should therefore regularly back-up any work and are advised to save it on the University system. If there are technical or performance issues that prevent students submitting coursework through the online coursework submission system on the day of a coursework deadline, an appropriate extension to the coursework submission deadline will be agreed. This extension will normally be 24 hours or the next working day if the deadline falls on a Friday or over the weekend period. This will be communicated via email and as a CUMoodle announcement.

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