Answered: The owner of a computer store rents…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Transcribed Image Text:1,058 238.1 4.5 1,049 0.5 163 6. 1,068 258.6 4.5 1,033 0.5 182 967 597.0 4.0 495 6.0 764 4.0 723 6.0 1,373 8. 997 414.0 4.0 681 1.0 978 1,044 263.2 5.0 890 1.0 466 10 1,008 372.0 Total $10,182 3,654.4 5.0 1,522 1.0 549 55 987 b. What are the correlation coefficient and the coefficient of determination? Comment on your regression equation in light of these measures. a. Use POM for Windows' least squares-linear regression module to develop a relationship to forecast the yearly maintenance cost based on the age of a tractor. c. Suppose that the market survey indicates a demand of 325,000 gallons in the Bucyrus, Ohio area. Estimate the manufacturing cost per gallon for a plant producing 325,000 gallons per year. b. Ifa section has 20 three-year-old tractors, what is the fore- cast for the annual maintenance cost? FORECASTING DEMAND CHAPTER 8 327 Time-Series Methods 8. Karl's Copiers sells and repairs photocopy machines. The manager needs weekly forecasts of service calls so that he can schedule service personnel. Use the actual demand in the first period for the forecast for the first week so error measurement begins in the second week. The manager uses exponential smoothing witha = 0.06. Forecast the number of calls for week 6, which is next week. 6. The owner of a computer store rents printers to some of her preferred customers. She is interested in arriving at a forecast of rentals so that she can order the correct quantities of supplies that go with the printers. Data for the last 10 weeks are shown here. Week Rentals Week Rentals 1 26 34 Week Actual Service Calls 2 25 7 32 1 24 3 36 45 2 36 4 28 33 36 5 38 10 28 4 25 30 a. Prepare a forecast for weeks 6 through 10 by using a 5-week moving average. What is the forecast for week 11? b. Calculate the mean absolute deviation as of the end of week 10. 9. Consider the sales data for Computer Success given in Problem 7. 7. Sales for the past 12 months at Computer Success are given here. a. Use a 3-month weighted moving average to forecast the sales for the months April through December. Use weights of (4/8), (3/8), and (1/8), giving more weight to more recent data. b. Use exponential smoothing with a = 0.6 to forecast the sales for the months April through December. Assume that the initial forecast for January was $3,200. Start error measurement in April. c. Compare the performance of the two methods by using the mean absolute deviation as the performance crite- rion, with error measurement beginning in April. Which method would you recommend? Month Sales (S) Month Sales ($) January 3,000 July 6,300 February 3,400 August 7,200 March 3,700 September 6,400 April 4,100 October 4,600 May 4,700 November 4,200 d. Compare the performance of the two methods by using the mean absolute percent error as the performance cri- terion, with error measurement beginning in April. Which method would you recommend? June 5,700 December 3,900 a. Use a three-month moving average to forecast the sales for the months May through December. e. Compare the performance of the two methods by using the mean squared error as the performance criterion, with error measurement beginning in April. Which method would you recommend? b. Use a four-month moving average to forecast the sales for the months May through December. c. Compare the performance of the two methods by using the mean absolute deviation as the performance criterion. Which method would you recommend? 10. A convenience store recently started to carry a new brand of soft drink. The management is interested in estimating future sales volume to determine whether it should continue to carry the new brand or replace it with another brand. The table below provides the number of cans sold per week. Use both the trend projection with regression and the exponential smoothing (let a = 0.4 with an initial forecast for week I of 578) methods to forecast demand for week 13. Compare these methods by using the mean absolute deviation and mean absolute percent error performance criteria. Does your analysis suggest that sales are trending and if so, by how much? d. Compare the performance of the two methods by using the mean absolute percent error as the performance crite- rion. Which method would you recommend? e. Compare the performance of the two methods by using the mean squared error as the performance criterion. Which method would you recommend? 2 Week 3 4 6 10 11 12 Sales 578 624 648 737 678 614 756 675 759 692 672 749 BART 1 CUST OMER DEMAN D MANLAGEMENT

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