Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 14P
A tourist center is open on weekends (Friday, Saturday, and Sunday). The owner-manager hopes to improve
a. Develop seasonal relatives for the shop using the centered moving average method.
b. Develop seasonal relatives for the shop using the SA method (see Example 8B)
c. Explain why the results of the two methods correlate the way they do.
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2. Solve using Excel. The monthly sales for Telco Batteries, Inc., were as follows:
Month
Sales
January
February
March
April
May
20
21
15
14
13
June
16
July
August
September
17
18
20
October
20
November
21
December
23
a. Plot the monthly sales data. Do you observe any trend, cycles or random variations?
b. Forecast January sales using each of the following:
a. Naïve method
b. A 3-month moving average
c. A 6-month weighted moving average using 0.1, 0.1, 0.1, 0.2, 0.2 and 0.3 with
the heaviest weights applied to the most recent months
d. Exponential smoothing using an x = 0.3 and a September forecast of 18.
c. Compute the MAD and MAPE for the naïve method and 3-month moving average.
a. Use a 3-month moving average to estimate the month-in-advance forecast of demand for months 4–12 and generate a forecast for the first month of next year. Calculate the average forecast error and mean absolute error.
b. Use a 3-month weighted moving average with weights of 0.6, 0.3, 0.1 (most recent to least recent, respectively) to calculate month-in-advance forecasts for months 4–12 and forecast for the first month of next year. Calculate the average forecast error and mean absolute error.
c. Compare the average forecast error and MAD for the forecasting methods in parts a and b. Based on these error calculations, which of the two forecast methods would you recommend? Why?
Forecasting is critical in modern times. Business organizations manifested more concern with anticipating the future, and as a consequence, a number of highly successful consulting firms emerged to provide forecasting help for governments and businesses. You are required:
iii. Identify the different levels that forecasting of business trends takes place.
iv. Give 3 examples where long-range forecasting can be used
v. Do you think forecasting is always correct and accurate? Discuss this assertion in detail
Chapter 3 Solutions
Operations Management
Ch. 3.15 - Prob. 1.1RQCh. 3.15 - Prob. 1.2RQCh. 3.15 - Prob. 1.3RQCh. 3 - What are the main advantage that quantitative...Ch. 3 - What are some of the consequences of poor...Ch. 3 - List the specific weaknesses of each of these...Ch. 3 - Forecasts are generally wrong a. Why are forecasts...Ch. 3 - What is the purpose of establishing control limits...Ch. 3 - What factors would you consider in deciding...Ch. 3 - Contrast the use of MAD and MSE in evaluating...
Ch. 3 - What advantages as a forecasting tool does...Ch. 3 - How does the number of periods in a moving average...Ch. 3 - What factors enter into the choice of a value for...Ch. 3 - Prob. 11DRQCh. 3 - Explain how using a centered moving average with a...Ch. 3 - Contrast the terms sales and demand.Ch. 3 - Contrast the reactive and proactive approaches to...Ch. 3 - Explain how flexibility in production systems...Ch. 3 - How is forecasting in the context of a supply...Ch. 3 - Which type of forecasting approach, qualitative or...Ch. 3 - Prob. 18DRQCh. 3 - Choose the type of forecasting technique (survey,...Ch. 3 - Explain the trade-off between responsiveness and...Ch. 3 - Who needs to be involved in preparing forecasts?Ch. 3 - How has technology had an impact on forecasting?Ch. 3 - It has been said that forecasting using...Ch. 3 - What capability would an organization have to have...Ch. 3 - When a new business is started, or a patent idea...Ch. 3 - Discuss how you would manage a poor forecast.Ch. 3 - Omar has beard from some of his customers that...Ch. 3 - Give three examples of unethical conduct involving...Ch. 3 - A commercial baker, has recorded sales (in dozens)...Ch. 3 - National Scan, Inc., sells radio frequency...Ch. 3 - A dry cleaner uses exponential smoothing to...Ch. 3 - An electrical contractors records during the last...Ch. 3 - A cosmetics manufacturer s marketing department...Ch. 3 - Prob. 6PCh. 3 - Freight car loadings ova a 12-year period at a...Ch. 3 - Air travel on Mountain Airline for the past 18...Ch. 3 - a. Obtain the linear trend equation for the...Ch. 3 - After plotting demand for four periods, an...Ch. 3 - A manager of a store that sells and installs spas...Ch. 3 - The following equation summarizes the trend...Ch. 3 - Compute seasonal relatives for this data the SA...Ch. 3 - A tourist center is open on weekends (Friday,...Ch. 3 - The manager of a fashionable restaurant open...Ch. 3 - Obtain estimates of daily relatives for the number...Ch. 3 - A pharmacist has been monitoring sales of 2...Ch. 3 - New car sales for a dealer in Cook County,...Ch. 3 - The following table shows a tool and die companys...Ch. 3 - An analyst must decide between two different...Ch. 3 - Two different forecasting techniques (F1 and F2)...Ch. 3 - Two independent methods of forecasting based on...Ch. 3 - Long-Life Insurance has developed a linear model...Ch. 3 - Timely Transport provides local delivery service...Ch. 3 - The manager of a seafood restaurant was asked to...Ch. 3 - The following data were collected during a study...Ch. 3 - Lovely Lawns Inc., intends to use sales of lawn...Ch. 3 - The manager of a travel agency has been using a...Ch. 3 - Refer to the data in problem 22 a. Compute a...Ch. 3 - The classified department of a monthly magazine...Ch. 3 - A textbook publishing company has compiled data on...Ch. 3 - A manager has just receded an valuation from an...Ch. 3 - A manager uses this equation to predict demand for...Ch. 3 - A manager uses a trend equation plus quarterly...Ch. 3 - ML MANUFACTURING ML Manufacturing makes various...Ch. 3 - ML MANUFACTURING ML Manufacturing makes various...Ch. 3 - HIGHLINE FINANCIAL SERVICES, LTD. Highline...
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- Under what conditions might a firm use multiple forecasting methods?arrow_forwardWhat is linear trend forecast.arrow_forward4. The following data gives the number of battery sales by one of the leading automobile company over the period of last six months. Month Actual Battery Sales January February 39 44 March 40 April May 45 38 June 43 a. Forecast the sales for the month of July using a 3-week moving average method. b. Forecast the sales for the month of July using a 3-week weighted moving average, with weights of 0.5, 0.3 and 0.2. Using 0.5 for the most recent month. c. Compute the forecast for the month of July using exponential smoothing with a = 0.5. (Assume the forecast for January was 39 batteries) d. Compute the errors of the of the forecast based on calculation in c. с.arrow_forward
- What forecasting technique makes use of written surveys or telephone interviews? Historical analogy, Delphi method, Marketing research, Ad hoc forecasting, or Collaborative forecasting? 2 Which qualitative forecasting technique was developed to ensure that the input from every participant in the process is weighted equally? Historical analogy, Delphi method, Marketing research, Ad hoc forecasting, or Collaborative forecasting? 3 When forecasting demand for new products, sometimes firms will use demand data from similar existing products to help forecast demand for the new product. What technique is this an example of? Historical analogy, Delphi method, Marketing research, Ad hoc forecasting, or Collaborative forecastingarrow_forward8. Air travel on Mountain Airlines for the past 18 weeks was: Week Passengers Week Passengers 405 10 440 410 11 446 420 12 451 415 13 455 412 14 464 6 420 15 466 7 424 16 474 8 433 17 476 9 438 18 482 a. Explain why an averaging technique would not be appropriate for forecasting. b. Use an appropriate technique to develop a forecast for the expected number of passengers for the next three weeks. 12345arrow_forwardThree popular measures of forecast accuracy are:a) total error, average error, and mean error.b) average error, median error, and maximum error.c) median error, minimum error, and maximum absolute error.d) mean absolute deviation, mean squared error, and meanabsolute percent error.arrow_forward
- The manager of the Salem police department motor poolwants to develop a forecast model for annual maintenanceon police cars based on mileage in the past year and age ofthe cars. The following data have been collected for eightdifferent cars: a. Using Excel develop a multiple regression equationfor these data.b. What is the coefficient of determination for thisregression equation?c. Forecast the annual maintenance cost for a police carthat is four years old and will be driven 10,000 miles inone year.arrow_forward1. The number of bushels of apples sold at a roadside fruit stand over a 12-day period were as follows: Day Numbar Sold Day Number Sold 25 35 31 8. 32 29 9. 10 38 33 34 37 40 37 32 11 12 If a two-period moving average has been used to forecast sales, what were the daily forecasts starting with the forecast for day 3? If a four-period moving average has been used, what were the forecasts for eacn uay starting with day 5? Plot the original data and each set of forecasts on the same graph. Which forecast has the greater tendency to smooth? Which forecast has the better ability to respond quickly to changes? What does use of the term sales instead of demand imply? a. b. C. 123 4 56arrow_forward. Describe trend, seasonality, random variation, and cycle as applied to forecasting.arrow_forward
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