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Lecture 7 Practice Problems

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9 views3 pages

Lecture 7 Practice Problems

Uploaded by

mohfarid150
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Arab Academy for Science, Technology and Maritime Transport

Graduate School of Business


Master of Business Administration Program
Operations Management Course
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Practice Questions and Problems (Lecture 7)

Questions

1. Give three examples showing why a business needs to forecast.


2. Describe the steps involved in forecasting.
3. Identify the key differences between qualitative and quantitative forecasting methods.
Which is better in your opinion and why?
4. What are the main types of data patterns? Give examples of each type.
5. Describe the different assumptions of time series and causal models.
6. Explain why it is important to monitor forecast errors.
7. Explain some of the factors to be considered in selecting a forecasting model.

Problems

1. Lauren’s Beauty Boutique has experienced the following weekly sales:

Forecast sales for week 6 using the naïve method, a simple average, and a three-period
moving average.

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Arab Academy for Science, Technology and Maritime Transport
Graduate School of Business
Master of Business Administration Program
Operations Management Course
----------------------------------------------------------------------------------------------
2. The following data are monthly sales of jeans at a local department store. The buyer
would like to forecast sales of jeans for the next month, July.
(a) Forecast sales of jeans for March through June using the naïve method, a two-
period moving average, and exponential smoothing with an α= 0.2. (Hint: Use naïve to
start the exponential smoothing process.)
(b) Compare the forecasts using MAD and decide which is best.
(c) Using your method of choice, make a forecast for the month of July.

3. Demand at Nature Trails Ski Resort has a seasonal pattern. Demand is highest during
the winter, as this is the peak ski season. However, there is some ski demand in the
spring and even fall months. The summer months can also be busy as visitors often come
for summer vacation to go hiking on the mountain trails. The owner of Nature Trails would
like to make a forecast for each season of the next year. Total annual demand has been
estimated at 4000 visitors. Given the last two years of historical data, what is the forecast
for each season of the next year?

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Arab Academy for Science, Technology and Maritime Transport
Graduate School of Business
Master of Business Administration Program
Operations Management Course
----------------------------------------------------------------------------------------------

4. Mop and Broom Manufacturing has tracked the number of units sold of their most
popular mop over the past 24 months. This is shown.

(a) Develop a linear trend line for the data.


(b) Compute a correlation coefficient for the data and evaluate the strength of the linear
relationship.
(c) Using the linear trend line equation, develop a forecast for the next period, month 25.

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