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Problems Case Essay

¶ … Managing Operations Across the Supply Chain Question (a) moving average demand predictions

The predictions in each quarter based on moving average calculations are as follows:

Y2Q1 = 1/N (y1q1 + y1q2 + y1q3 + y1q4)

where Y2Q1 represents forecasts for year 2 quarter 1 and y1q1 .. ynqn are actual demands for year n quarter n and N. represents the number of quarters used to calculate the average.

This nomenclature is used throughout the calculation where YnQn represents Year n Quarter n.

Y2Q1 = 1/4(18+19+18+17) = 18 kayak paddles

Y2Q2 = 1/4(19+18+17+18) = 18.25

Y2Q3 = 1/4(18+17+19+21) = 18.75

Y2Q4 = 1/4(17+19+21+18) = 18.75

Y3Q1 = 1/4(19+21+18+19) = 19.25

Y3Q2 = 1/4 (21+18+ 19+20) = 19.5

Y3Q3 = 1/4 (18+19+20+24) = 20.25

Y3Q4 = 1/4(19+20+24+28) = 22.75

Year

Y4Q1 = 1/4 (20+24+28+32) = 26

Y4Q2 = 1/4 (24+28+32+30) = 28.5

Y4Q3 = 1/4 (28+32+30+31) = 30.25

Y4Q4 = 1/4 (32+30+31+34) = 24.25

Year

Y5Q1 = 1/4 (30+31+34+40) = 33.75

Y5Q2 = 1/4 (31+34+40+42) = 36.75

Y5Q3 = 1/4 (34+40+42+38) = 38.5

Y5Q4 = 1/4 (40+42+38+59) = 44.75

Year 6

Y6Q1 = 1/4 (42+38+59+58) = 49.25

Y6Q2 = 1/4 (38+59+58+60) = 53.75

Y6Q3 = 1/4 (59+58+60+61) = 59.5

Y6Q4 = 1/4 (58+60+61+62) = 60.25

Managing Operations 2

Year 7

Y7Q1 = 1/4 (60+61+62+62) = 61.25

Y7Q2 = 1/4 (61+62+62+64) = 62.25

Y7Q3 = 1/4 (62+62+64+65) = 63.25

Y7Q4 = 1/4 (62+64+65+66) = 64.25

Year 8

Y8Q1 = 1/4(64+65+66+68) = 65.75

Y8Q2 = 1/4(65+66+68+69) = 67

Y8Q3 = 1/4(66+68+69+68) = 67.75

Y8Q4 = 1/4 (68+69+68+67) = 68

Question (b) exponential smoothing demand predictions

FQ2 = FQ1 + ? (dq1 -- FQ1)

Where FQ2 = forecast demand in quarter 2, ? is the smoothing coefficient, (dq1 - FQ1) is the forecasting error, FQ1 is the forecast demand for the previous period and dq1 is the actual demand for the corresponding period.

Year1 (Y1)

F (Y1Q2) = 17+0.1(18-17) = 17.1 given initial forecast of year 1 quarter...

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See accompanying Microsoft Excel spreadsheet. The moving average gives better performance in this case.
Demand

Exp Smooth

Mov Avg

Table 1, Actual Demand, each Quarter, Predictions using Exponential Smoothing and Moving Averages

Managing Operations 5

Question 2 Production…

Sources used in this document:
Reference

Kerin, R., Hartley, S., Rudelius, W., Clements, C., & Skolnick, H. (2009). The Core. New York: McGraw-Hill.
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