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Individual Assignment 2 - Analytical Problems

The document outlines an individual assignment for a course, requiring students to analyze historical demand data and apply various forecasting methods, including moving averages, exponential smoothing, and regression analysis. It also involves decision-making regarding the establishment of a new factory based on transportation costs and demand forecasts, as well as finding a central location for a new warehouse based on store locations and demand. Students must calculate forecast accuracy measures and justify their recommendations based on the analyses conducted.

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15 views3 pages

Individual Assignment 2 - Analytical Problems

The document outlines an individual assignment for a course, requiring students to analyze historical demand data and apply various forecasting methods, including moving averages, exponential smoothing, and regression analysis. It also involves decision-making regarding the establishment of a new factory based on transportation costs and demand forecasts, as well as finding a central location for a new warehouse based on store locations and demand. Students must calculate forecast accuracy measures and justify their recommendations based on the analyses conducted.

Uploaded by

am.ha10189
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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College of Business

SCM540: Assignment 2 Masoud Khakdaman


Type: Individual assignment
Weighting: 10 % of final grade
Read the three questions carefully and answer them. Good luck!

Question 1:
Three-years historical demand data of a manufacturing company includes quarterly demand
for a product as follows:

Quarter Demand
1 177
2 194
3 152
4 132
5 202
6 222
7 179
8 147
9 222
10 240
11 191
12 165

a) Using the simple four-month moving average method, forecast the demand for
periods 5 to 12.
b) Apply the weighted four-month moving average method using weights of 0.4, 0.3,
0.2 and 0.1, for the most recent to the least recent periods, respectively, to forecast
the demand for periods 5 to 12.
c) Forecast the demand for periods 2 to 12 using the single exponential smoothing
forecast. Consider first period’s forecast as 175 (F1=175) and an α of 0.20.
d) Forecast the demand applying the exponential smoothing with trend component for
periods 2 to 12. To initialize your forecast, consider an initial trend forecast (T1) of
3.8, an initial exponential smoothing forecast (F1) of 175, an α of 0.20, and a δ of
0.30.
e) Fit a simple linear regression model to the demand data.
f) Using the regression equation in part e, calculate the forecast for month 1 to 16.
g) Using results of part f, determine seasonal factors for years 2, 3 and 4 (assume each
year (4 quarters) as a full cycle). Using this info, Forecast including Trend and
Seasonal factor (Multiplicative method) for years 2,3, and 4.
h) Calculate the mean absolute deviation (MAD), Mean absolute percent error (MAPE)
and Tracking signal (TS) for the forecasts made by each technique in periods 4 to 12.
Which forecasting method do you prefer? why?
i) Now is end of year 4 and you got actual demand data for quarters 13 to 16 as 210,
217, 183, and 146, respectively. Recalculate the forecast accuracy measures for your
Forecast including Trend and Seasonal factor considering periods 4 to 16. How
accurate was your forecast for the last 4 periods?

Question 2:
An international company in healthcare industry is currently serving the European market
from three existing factories in Dusseldorf, Amsterdam, and The Hauge. Due to the huge
growth in demand in recent years and analyzing the market growth in next years, the
leadership team of the company is willing to add an additional plant in Geneva or Budapest.
One of the main criteria for this decision is the transportation cost. The following Table
shows the transportation cost per unit product from factories to the consumer markets in
Brussels, Paris, Lisbon, and Zurich.

To Brussel Lisbon Paris Rome Vienna Zurich Supply


s capacity
From
Amsterdam 20 25 22 29 24 19 1100
Dusseldorf 17 27 25 30 19 15 850
The Hauge 21 20 22 30 16 23 550
Budapest 37 28 19 25 30 14 500
Geneva 22 30 21 18 27 21 500
Demand 350 450 850 600 450 300

a) The company should establish the new factory in Budapest or Geneva? Why?
(b) Due to new forecast updates, company expects 20% lower total demand. Will the result
of part (a) be different?

Question 3:
Company A has four stores located in the UK and currently supplied out of an old and
inadequate warehouse in Manchester. Can you find a “central location” for this company to
build a new warehouse?
City X-coordinate Y-coordinate Demand

Lancaster 30 120 2000


130 130 1000
New Castle
90 110 1000
Manchester
60 40 2000
London

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