Health Threats
March 24, 2022
BUS 306 – Quantitative Business Analysis
March 24, 2022
Question 1: Multiple Choice Questions (3 Marks, 0.5 mark each)
| 1 | 2 | 3 | 4 | 5 | 6 |
| a | b | d | C | d | a |
Question 2: True –False Questions (3 Marks, 0.5 mark each)
| 1 | 2 | 3 | 4 | 5 | 6 |
| T | T | F | T | T | F |
Question 3: Problem-solving (14 Marks)
- Compute the Demand forecast for the month of July using the moving average of order 3. Compute the whole MA series (show computation for July). (2 Marks)
| Period | Month | Demand Dt (units) | Three-Month Moving Average |
| 1 | Jan. | 45 | — |
| 2 | Feb. | 65 | — |
| 3 | Mar. | 52 | — |
| 4 | Apr. | 81 | 54 |
| 5 | May | 68 | 66 |
| 6 | Jun. | 88 | 67 |
| 7 | Jul. | — | 79 |
- Compute the Demand forecast for the month of July using the weighted moving average of order 3, the weights from the most recent month are 60%, 30%, and 10%. Compute the whole WMA series (show computation for July). (2 Marks)
| Period | Month | Demand Dt (units) | Three-Month Weighted Moving Average |
| 1 | Jan. | 45 | — |
| 2 | Feb. | 65 | — |
| 3 | Mar. | 52 | — |
| 4 | Apr. | 81 | 18.4 |
| 5 | May | 68 | 38.3 |
| 6 | Jun. | 88 | 23.4 |
| 7 | Jul. | — | 27.1 |
- Compute the Demand forecast for the month of July using the exponential smoothing with α = 0.3, assuming that F1 = 50 units (show computation for July). (4 Marks)
| Period | Month | Demand Dt (units) | exponential smoothing Demand forecast Ft (α= 0.3) |
| 1 | Jan. | 45 | 50.00 |
| 2 | Feb. | 65 | 48.5 |
| 3 | Mar. | 52 | 53.45 |
| 4 | Apr. | 81 | 53.015 |
| 5 | May | 68 | 61.4 |
| 6 | Jun. | 88 | 63.38 |
| 7 | Jul. | — | 70.77 |
- Calculate the tracking signal TS for exponential smoothing and plot it (show computation for March). Based on the plot, is the ES forecast in control? Explain why. (6 Marks)
| Period t | Month | Demand Dt | ES forecast Ft (α= 0.3) | Error
Dt — Ft |
Σ(Dt—Ft) | Abs. Error
|Dt—Ft| |
Σ|Dt—Ft| | MAD | TS |
| 1 | Jan. | 45 | 50.00 | — | — | — | — | ||
| 2 | Feb. | 65 | 48.5 | 16.5 | 16.5 | 16.5 | 16.5 | 48.5 | 2.9 |
| 3 | Mar. | 52 | 53.45 | -1.45 | 15.05 | 1.45 | 17.95 | 50.55 | 3.36 |
| 4 | Apr. | 81 | 53.015 | 27.985 | 43.03 | 27.985 | 45.985 | 53.01 | 1.23 |
| 5 | May | 68 | 61.4 | 6.6 | 49.63 | 6.6 | 52.535 | 54.8 | 1.1 |
| 6 | Jun. | 88 | 63.38 | 24.62 | 74.25 | 24.62 | 77.155 | 63.38 | 0.85 |
| 7 | Jul. | — | 70.77 | — | — | — | — | — | — |
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The exponential smoothening forecast is not in control because it has exceeded the upper control limit. The tracking signal has exceeded the control limits and the forecasting process should be reviewed.
Question 4: Problem-solving (10 Marks)
- Compute the optimal order quantity Qopt. (3 Marks)
EOQ=2×Demand×Ordering CostCost of holding
2×14,400×1000.5=
=2400
- Compute the minimal annual total cost TCmin. (3 Marks)
Holding cost =Demand/2 =14400/2=7200
Ordering cost=demand/optimal order quantity *ordering cost=
14,400/2400*100=600
TC=holding cost +ordering cost
7200+600=8000
- Compute the Number of Orders per Year. (2 Marks)
Demandoptimal order quantity×ordering cost
14,4002400×100
=600 orders
- Compute the Order Cycle Time in a number of days, assuming there are 300 workdays per year. (2 Marks)
14,4002400×300
=1800 days
