Reference no: EM132390544
Supply and Demand Planning and Control
Question 14. Charlie's Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive.
Charlie's Pizza uses an average of 150 pounds of pepperoni each week, with a standard deviation of 30 pounds. Charlie's prides itself on offering only the best-quality ingre- dients and a high level of service, so it wants to ensure a 98 percent probability of not stocking out on pepperoni.
Assume that the sales representative just walked in the door and there are currently 500 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni would you order?
Question 15. Historical demand for a product is
Demand
January 12
February 11
March 15
April 12
May 16
June 15
a. Using a weighted moving average with weights of 0.60, 0.30, and 0.10, find the July forecast.
b. Using a simple three- month moving average, find the July forecast.
c. Using single exponential smoothing with α = 0.2 and a June forecast = 13, find the July forecast. Make whatever assumptions you wish.
d. Using simple linear regression analysis, calculate the regression equation for the preceding demand data.
e. Using the regression equation in d, calculate the forecast for July.
Question 16. Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolinear chips. The trip will take Data about two days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of 5 per day (seven days per week) with a standard deviation of demand of 1 per day. He needs a 98 percent service probability. If he currently has 35 chips in inventory, how many should he order? What is the most he will ever have to order?
Question 17. Here are the actual tabulated demands for an item for a nine-month period (January through September). Your supervisor wants to test two forecasting methods to see which method was better over this period.
Month Actual
January 110
February 130
March 150
April 170
May 160
June 180
July 140
August 130
September 140
a. Forecast April through September using a three-month moving average.
b. Use simple exponential smoothing with an alpha of 0.3 to estimate April through September, using the average of January through March as the initial forecast for April.
c. Use MAD to decide which method produced the better forecast over the six-month period.
Question 22. Your manager 1s trying to determine what forecasting method to use. Based upon the fol- lowing historical data, calculate the following forecast and specify what procedure you would utilize.
Actual Month Demand
1 62
2 65
3 67
4 68
5 71
6 73
7 76
8 78
9 78
10 80
11 84
12 85
a. Calculate the simple three-month moving average forecast for periods 4 to 12.
b. Calculate the weighted three-month moving average using weights of 0.50, 0.30, and 0.20 for periods 4 to 12.
c. Calculate the single exponential smoothing forecast for periods 2 to 12 using an initial forecast (F',) of 61 and an α of 0.30.
d, Calculate the exponential smoothing with trend component forecast for periods 2 to 12 using an initial trend forecast (T1) of 1.8, an initial exponential smoothing forecast (F1) of 60, an α of 0.30, and a δ of 0.30.
e. Calculate the mean absolute deviation (MAD) for the forecasts made by each technique in periods 4 to 12. Which forecasting method do you prefer?
Question 23. Gentle Ben's Bar and Restaurant uses 5,000 quart bottles of an imported wine each year. The effervescent wine costs $3 per bottle and is served only in whole bottles because it loses its bubbles quickly. Ben figures that it costs $10 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes three weeks for an order to arrive. Weekly demand is 100 bottles (closed two weeks per year) with a standard devia- tion of 30 bottles.
Ben would like to use an inventory system that minimizes inventory cost and will pro- vide a 95 percent service probability.
a. What is the economic quantity for Ben to order?
b. At what inventory level should he place an order?
Question 34. SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand for each color is 3,000 units. Each shirt requires 0.5 pound of raw cotton that is imported from Luft-Geshfet-Textile (LGT) Company in Brazil. The purchasing price per pound is $2.50 (paid only when the cotton arrives at SYM's facilities) and trans- portation cost by sea is $0.20 per pound. The traveling time from LGT's facility in Brazil to the SYM facility in the United States is two weeks. The cost of placing a cotton order, by SYM, is $100 and the annual interest rate that SYM is facing is 20 percent.
a. What is the optimal order quantity of cotton?
b. How frequently should the company order cotton?
c. Assuming that the first order is needed on April 1, when should SYM place the order?
d. How many orders will SYM place during the next year?
e. What is the resulting annual holding cost?
f. What is the resulting annual ordering cost?
g. If the annual interest cost is only 5 percent, how will it affect the annual number of orders, the optimal batch size, and the average inventory? (You are not expected to provide a numerical answer to this question. Just describe the direction of the change and explain your answer.)