BUS 221
Quantitative Methods, Advanced.
Assignment 2: Forecasting & Inventory Control
This homework assignment asks you to practice what you have learned in Ch.5+6, “Forecasting”, and “Inventory Control”.
Please do all problems, and give them to your tutor. Your solutions do NOT need to be typed. You may give your tutor hand-written solutions. However, the pages you submit must contain your name and student number on the first page. All pages must be stapled together. All your work must be neat: if it is too difficult to read, it will be marked as “incorrect”. Please use only standard A4 size paper.
The assignments will be due at your tutorial on Monday November 3. Late submissions will be given zero, so don't bother to hand them in. The solutions will be posted shortly after the latest time for submissions on the standard website ().
If you can do the problems in this assignment by yourself, and in a reasonable amount of time, then you should be confident that you will be able to do similar questions on the exam. Because of this, you should try to do all of these questions by yourself.
Please refer to the core textbook for all the problems:
Render, B. et al., 2007, Quantitative Analysis for Management, 9th Ed., Peking University Press.
PROBLEM SET
These problems are found in the Core Text, Ch. 5 (pp. 182-186), and Ch. 6 (pp. 230-236). Questions are of unequal value. The marks for each problem are indicated at the start of the question, like this: (10%).
Ch.5: Forecasting
Q1. (10 %). 5-25, entire question
Q2. (20 %) Sales of Cool-Man Air Conditioners have grown steadily during the past five years:
Year from Start (yr) / Sales(RMB '000s)
1 / 450
2 / 495
3 / 518
4 / 563
5 / 584
6 / ???
In Year “0” (i.e., before the business started) the sales manager had predicted that year 1 sales would be 410 air conditioners.
(a) make exponential smoothing forecasts to determine expected sales in years 2-6. Use weights of α = 0.3, 0.6 and 0.9.
(b) do moving average forecasting (perform the average using 3 years), with weighted forecasting and unweighted forecasting, for years 4-6.
(c ) assume that a linear regression is done on the data for years 1 to 5. This linear regression line is:
Sales is measured in 1000's RMB, and Year = 1, 2,.... etc. The regression equation that is found is:
Which forecasting method is best, and why? You need to consider all of the forecasts that you did in (a), (b) and the linear regression equation given in (c ).
Ch. 6: Inventory Control
6-44. (20%) This problem deals with safety stock using a probability of different demands.
6-41. (20%) This problem deals with ABC analysis.
6-45. (20%) This problem deals with Quantity Discounts.
6-22. (10 %) This is a very basic inventory problem that all students should be able to do.
END