Ie 343 Test 2

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IMSE 343 There-are

EXAM 2B

33 questions

February

28, 2006

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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 to use the Factor-Rating Method to determine the new site based on the maximum value and the following data: Factor Labor Taxes Securi

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Location C 60 300

Location A 90 '-16 60 I ~O 20 t..\o

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Give the letter and score of the location alternative that should be chosen:

Given: The Blue Sail Co. has a choice of two locations to build a plant. The fixed and variable costs for the two alternative locations are given below: -:. 37r°Oo 7,oOQ .-r 10-( 3(0\)o} WV AR NC $5 $7 $10 $7,000 COSTS $10,000 $15,000 0 ,01;)0 ~ "7 (3,(}o\) ) :: 3'1 POD

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

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

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G'lVen: Th e L'Igh t T ruc kC o. wants to b Ul'ld a new d"b' ~,(HIO Istn utIOn laCI'1'Ity to sh'Ip repaIr parts to~hr5>.. t ee ware h ouses. The company will use the "Center-of-Gravity Method" to decide where the new distribution facility would be built. The Volume and map coordinates for the three warehouses are shown below: &".

1000 Coordinates 3000 2000 5000 Volume (3,8) Collection (2,9) (9,2) (7,4) (X,Y) Points

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

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310 200 320 Nov 340 280 380 310 230 240 Mar Feb 285 270 290 315 350 210 320 260 2880 Total 300 Jul 3405 350 220 250 Jun Dee 260 290 3795 300 230 380 150 300 340 240 250 270 220 Jan Au!=! Apr Mav! Oct Sep

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What is the seasonal index for the month of May (3 decimals)?

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What is the forecasted sales in units for the month of May in year 2006 (nearest unit)? 1.0 Y ~

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Given: Robert is the production manager at a company, which manufactures diesel engines. Robert needs a demand forecast for the next year to help decide whether to add new production capacity. The initial forecas~ for 2005 was 7800 units. Alpha =.6 The actual sales for year 2005 was 7000 units. Use Exponential Smoothing without trend.

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

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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

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-is -l-"~ xSQ 354 9 3600 4900 100 121 600 70 10 3025 385 49 270 2025 3(~iv·l 30 900 1 1225 70 2 .),9 135 2025 45 200 4430 50 40 1600 600 2500 32300 1600 6 1 4 6xy 4 6400 144 960 450 8 1 60 770 11 6 55 7 400 160 2 5 3 80 12 y650 78 985~x ySQ /" (000) 'rJ;Ou( jf"DI, ~.7/US)~ -, ) q I t7U ' >:\-( r ( 1!4( -- G 360 ~73G O(

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

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

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

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Given: The forecast of Joe's Pizza and actual demand for the past six weeks are given below. Also, Joe has determined that most recent demand probably should be weighted with the highest number if he decides to use the Weighted Moving Average. He used weights of 1,2,3,4. /

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Demand 60 70 80

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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 above c. short-range forecast

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18. Given forecast errors of -1,4,8, -3 what is the Mean Absolute Deviation @4 d. 8 e. 16 a. 2 b. 3 ' 19. Forecasts d. all of the above e. none of the above

(a:) Are rarely accurate b. Become more accurate with longer time horizons c. More accurate for individual items than for groups of items 20. Primary purpose of the Mean Absolute Deviation is: a. estimate the trend line b. eliminate forecast errors c. seasonally adjust the forecast

<4)measure forecast accuracy e. all of the above

21. Which of the following would be an advantage when using a sales force composite to develop a demand forecast? a. Sales staff is least affected by the changing customer needs b. Sales force can easily distinguish between customers @ Sales staff often is aware of customers' future plans d. 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 one 23. Which forecasting model is NOT well suited for data series that have trends and always lags behind the

~nds. caJ moving average b. weighted moving average c. exponential smoothing

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d. all of the above e. none of the above

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

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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 above c. transportation model 26. Community attitudes, zoning restrictions, quality of the labor force are likely to be considered in which of the following location decision methods? d. all of the above a. center-of-gravity e. none of the above b. locational break-even analysis '@)factor-rating 27. The crossover chart for locational break-even analysis shows where a. 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 consideration a. location of markets and warehouse Qi) value of goods shipped to markets and warehouses c. volume of goods shipped to markets and warehouses

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d. combination of volume and distance e. None of the above

Center-of-gravity a. service locationsmethod is used primarily to determine d. supplier whatlocations type of locations e. telemarketing locations c. distribution centers

@ manufacturing locations

30. Which of the following is true regarding the two smoothing constants of the Forecast Including Trend Model: ~q)lfIT) They are called alpha and bets, Producer's

b. Alpha is always smaller than Beta c. Their values are determined independently d. All of the above are true e. None of the above are true

Risk and Consumer's Risk

32. Explain how sea~onal patterns are different from cyclical patterns? . j '. '" l j . JI eas 01) Gd fcd j (; f 1] S i.U~· 1;t/f!e t'- Itf! mot' -if1 'I"

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Bonus2 A firm is considering use of several competing forecast techniques that they have judged all appropriate techniques for the forecast on hand. It is your task to determine the forecast accuracy of each of the techniques and then to recommend one technique. How would you go about the process of determining which tec~iques /,

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