/ IMSE 343EXAM 2B February 28, 2006 Name 2aJ,u(1 llk"~j

There-are 33 questions each worth 3 points except question 33 is worth 4 points,

Given: A service company wants to locate a new department store using 3 alternative locations. They want touse the Factor-Rating Method to determine the new site based on the maximum value and the following data:

Location C60 30080 2Lj60

Wei ht5

32

Location A

90 '-16

60 I~O20 t..\o

{,70 ~o 6'0670 Give the letter and score of the location alternative that should be chosen:A,,1.

FactorLaborTaxesSecuri

-:.37r°Oo

:: 3'1 POD,j ':.j()/~OOI

10-( 3(0\)o}

"7 (3,(}o\) )

S ()fO ~ ()

7,oOQ .-r

l0 ,01;)0 ~

/5(ODO +

r-f·loa 0 i~OD '1.500

wv Which alternative location is the lowest total cost at 3,000 units?

)(2. 2500 Over what range of number of units (x) alternative WV is the low-cost choice (must

be exact calculated numbers and not picked off of a grid)? \,J V A ~

1 A~ I~(OOO tS>( - /o,bOOf-7)(--I~ ,.(ruljO -;: <,X

X ~ 2500

2.

3.

Given: The Blue Sail Co. has a choice of two locations to build a plant. The fixed and variable costs for the twoalternative locations are given below:

AI{

I O{OOOt 7t­J/() 0 C

"'\ = ~o~0N('

15(OQO 15)( -: 70004/0]( 166CG' Th L' h T kC b 'ld d"b' &". '1' h' ~,(HIO ~hr5>.. h «=lVen: e Ig t ruc o. wants to Ul a new Istn utIOn laCI Ity to s Ip repaIr parts to t ee ware ouses.The company will use the "Center-of-Gravity Method" to decide where the new distribution facility would bebuilt. The Volume and map coordinates for the three warehouses are shown below:

X 4:Y~f QOO 10,000 X 7L/ooo,

"LlfllQ 0 11...(0110 _.- 'rlL~ I 0 0 Q ,~ f ~ 0 0 II ( 0 (jej

III 1..,o~ Cf (00 a y - '-i{II!!~.~ Llr 17/ U ;~oo.. ,7LfOQO 1..17,000 IIJO,\)I'I4. . c,', "3, . What IS (Y) coordmate where the collectIOn center should be located (one declmIll)?

COSTS NCARWVFixed

$7,000$10,000$15,000Variable

$10$7$5

Collection Points Volume(X,Y) CoordinatesA

5000(9,2)B

3000(7,4)C

2000(3,8)D

1000(2,9)

Given: The Blue Company's 2004 and 2005 sales demand is listed below. The sales for year 2006 isforecasted to be' 4800 units.

JL~ 3360" 21.3.dl .•.

] ..J;~()

FitsO/?Y- 2.J3:?J5. ~ What is the seasonal index for the month of May (3 decimals)?

i-iMonth

JanFebMarAprMav!JunJulAu!=!SepOctNovDeeTotal

2003

2202102302302402603203002502402301502880

2004

2502702802853003103403203102802602003405

2005

2702903003153403503803803503102902203795

.-/--

6. What is the forecasted sales in units for the month of May in year 2006 (nearest unit)?

1.0 Y ~ ( ::"1V 0 ) -- L.J 19, 'C

Given: Robert is the production manager at a company, which manufactures diesel engines. Robert needs ademand forecast for the next year to help decide whether to add new production capacity. The initial forecas~ for2005 was 7800 units. Alpha =.6 The actual sales for year 2005 was 7000 units. Use Exponential Smoothingwithout trend.

7. ~320•

Forecast for year 2006 )F+ ~ F:r - J + c{ (A f _j .f:-;- , /

-: 7~{}O l' I b (700() - 78'00}

Given: The Hassick Corp wants to forecast the next months Feb 2006 sales using the FIT method. The initialforecast (step 1) was 78,000 for Jan and the initial Trend (step 2) was 500 units. Alpha = .4 and Beta = .9Demand for Jan was 80,000 units. Use Exponential Smoothing wffrend:

/3

/1

7 f; toO':. For6CCl5t--- /_.----------------- _-- _ .._-

qrY(OO'

r

)51'(-" 2I -l I \ !!I

I lJ )

I\ f...; lJ',j

..7707' -~

?\1

So.L V

Given: The Jp Holly Co, wants to use a regression line to predict the next month's sales. They plotted points

and found a linear relationship exists. (b = 3.71 and a = 25.91) Actual sales demand in (000) for year 200t, S

(000)rMonth xyxSQ xyySQ -, ) q I\-~.7/US)~

Jan130130900r ---l-- "~

Feb

2354701225 is . (0>: J;Ou(---/..J6 'rMar 34591352025

Apr

440161601600

May

540252001600

F0i( 1!4( I,Jun645362702025 -.),9 (~iv·l ~O(

" (Jul 755493853025 /"

Aug850644002500

Sep

950814502500G 360Oet

10601006003600

Noy11701217704900

~73GDee

12801449606400 jf"Dt7U 'SUM78600650443032300

flSF& ~JS-'yY)A D

rv'lAct

Ic"\_1

o~15

What is the "measure ofthe variability around the regression line" in units?

What is the forecast in units for the sales for March 2006?

<rC \ .

9>1,5(0

10. :t 5/bY S

« ~2Y.

9,

11. What is the measure of the strength of the relationship between x and y variables?

Sy,x ~~;;';O-=--~OT_~_2:7,~j::,~~ L-'. . (;360

I ~ ( '-1 '-/ 3 0 ) --_-7- 8' (JL?..~_l..,- -==-----_.:::~=~~==---------,--"'-"'-.--- ,.,...--.------

\l~l.(bSO) - (78''}). J [IL( 3~i300)- (bOO fJl7}b ]...7,(,00Given: The forecast of Joe's Pizza and actual demand for the past six weeks are given below. Also, Joe hasdetermined that most recent demand probably should be weighted with the highest number if he decides to usethe Weighted Moving Average. He used weights of 1,2,3,4.

/

Week Feast Demand Error ((JF-E leSfr,,,r L.:~'::\-, \) 10 \ Q

1 70 60 -102 70 70 0 -I() Q

3 85 80 -5 _.1) 54 95 105 [~ -5 10

hitI

7-

3~

'70 . c·C~ IDe60t, t'DitJ

Ir-I

::: '75"". 7J

____ Using the Naive Method, what is the forecast for week 5

3

LJ(I.S)(~)..-

~.sl - Y(I(S)~

~,O)7 [IS)

:- 5,077

-Yo lib +b

) ;'.,U

17. Forecast with time horizon of about 3 month - 3 year is typically called:a. long-range forecast d. strategies forecast® medium-range forecast e. all of the abovec. short-range forecast

18. Given forecast errors of -1,4,8, -3 what is the Mean Absolute Deviationa. 2 b. 3 ' @ 4 d. 8 e. 16

19. Forecasts

(a:) Are rarely accurateb. Become more accurate with longer time horizonsc. More accurate for individual items than for groups of items

d. all of the abovee. none of the above

20. Primary purpose of the Mean Absolute Deviation is:a. estimate the trend lineb. eliminate forecast errorsc. seasonally adjust the forecast

<4)measure forecast accuracye. all of the above

21. Which of the following would be an advantage when using a sales force composite to develop ademand forecast?a. Sales staff is least affected by the changing customer needsb. Sales force can easily distinguish between customers

@ Sales staff often is aware of customers' future plansd. Sales peopleleast lik~y t()be influenced byrec.enteventL_______________ , '

--- --""e." Salespeople m-e-lea~tlikely to be biased by sales quotas

4

22. If two variables were perfectly correlated, then the correlation coefficient (r) would equal

/ O. b. <1 @exactly 1 d. -1 or +I e. greater than one23. Which forecasting model is NOT well suited for data series that have trends and always lags behind the

~nds./' caJ moving average d. all of the aboveb. weighted moving average e. none of the abovec. exponential smoothing

24. Which forecasting technique is a quanitative method?I. exponential smoothing III. Regression analysisII. sales force composite IV. Consumer market survey

a. I& II (}) I & III c. I & IV d. II & III e. ll&IV

d. all of the abovee. none of the above

25. An approach to location analysis that includes both qualitative and quantitative considerations is:a. locational cost-volume d. make or buy analysis

(2) Jfactor-rating e. none ofthe abovec. transportation model

26. Community attitudes, zoning restrictions, quality of the labor force are likely to be considered in whichof the following location decision methods?a. center-of-gravityb. locational break-even analysis

'@)factor-rating

27. The crossover chart for locational break-even analysis shows wherea. Fixed costs are equal for alternative locations d. Fixed costs = variable costs 'b. Variable costs are equal for alternative locations e. None of the above@ Total costs are equal for alternative locations

28. Center-of-gravity does NOT take into considerationa. location of markets and warehouse

Qi) value of goods shipped to markets and warehousesc. volume of goods shipped to markets and warehouses

d. combination of volume and distancee. None of the above

7Center-of-gravity method is used primarily to determine what type of locations/ a. service locations d. supplier locations@ manufacturing locations e. telemarketing locations

. c. distribution centers

30. Which of the following is true regarding the two smoothing constants of the Forecast Including Trend

lfIT) Model:~q) They are called alpha and bets, Producer's Risk and Consumer's Riskb. Alpha is always smaller than Betac. Their values are determined independentlyd. All of the above are truee. None of the above are true

32. Explain how sea~onal patterns are different from cyclical patterns? . . /j '. '" 'I" l j . J I . ," .J" r ' 'J

5eas 01) Gd fcd j (; f 1] S i.U~· 1;t/f!e t'- Itf! mot' -if1 'I f ~,.{C( ••. ,C !,..C ! " ,f.)q t, t, ~f n\f(iI •... TV \.. -

,,(0 cq I;I"" -I

They

[\.

,+~,

33. List the seven steps to do a forecast

I 1\' ;.( ( ;'~. urfer tillt1 e 0S E: 0""

1. £ef6C+ ('few!J 'i'(

~. D(:-,f<? (il"";!!~, t-e rJ'Y)

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r-tor

6

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Bonus2 A firm is considering use of several competing forecast techniques that they have judged allappropriate techniques for the forecast on hand. It is your task to determine the forecast accuracy of each ofthe techniques and then to recommend one technique. How would you go about the process of determining

which tec~iques pe mosta~ (Do not use t?e tracking signal in this answer)./, fJe if'" /'t111l e "thE,r' (' 'V-t the- '{orf Qs1 .

~ fb J... Oh.rerv6 /if;fV\~ --ir,,,.' f)f'-e q: ',;.~ 'f;) i}f ·/.'t-C7(f,.jI ~ , . 1...•. .;. I [ i ; I ;

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