ADM 3301 : forecastingtimeseriesdemand.doc

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orangegiraffe962

9 Jul 2014

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The expected cost of developing a forecast should not exceed the expected benefits. Types of forecasts include: weather, stock market, sporting events, technological, economic, demand. Factors that influence demand include: business cycle, growth, recession, recovery, stagnation, product life cycle, introduction, growth, maturity, decline, customers own conditions. Long range: 5 years or longer: product planning, research programming, capital planning, plant location and expansion. Intermediate range: 1 to 2 years: analysis of alternative operating plans. Intermediate operations planning: capital and cash budgets, sales planning, production (aggregate) planning, production and inventory budgets. Job scheduling: adjustment of production and employment, project assignment, overtime decisions. Forecasting of demand for goods or services can be done in many different ways. Figure 1 illustrates how the various techniques can be classified. Qualitative techniques rely on experience that has not been captured in the form of hard data. Causal models are based on finding a cause and effect relationship.

Related Questions

Question 1

In order to compete effectively in todayâs increasingly globalised market, many companies have used features related to environmental sustainability to âwinâ new customers.

In relation to the company you work in or one that you are familiar with,

(a) Explain the term âsustainable business strategyâ and how this strategy relates to operations and supply chain management.

(8 marks)

(b) Identify an operations and supply chain-related "disruption" that impacted the company. What could the company have done to minimise the impact of this type of disruption prior to it occurring?

(7 marks)

(c) You have recently been appointed as the production manager of the company. To meet the demands of its global market, the company has set up production locations in two different countries. One is located in the USA while the other is located in a Southeast Asian country. You want to find out what is the productivity of the current operations at the two production locations. You have obtained the following results from the production supervisor (Table 1).

Table 1

*FC â Foreign Currency where $1 = FC 10

	USA	Southeast Asia
Sales (units)	100,000	20,000
Labour (hours)	20,000	15,000
Raw materials (currency)	$20,00	*FC 20,000
Capital equipment (hours)	60,00	5,000

(i) Calculate the multifactor productivity figures for labour and capital together. Do the results make sense?

(5 marks)

(ii) Calculate raw material productivity figures (units/$) and explain any differences in these figures.

(5 marks)

Question 2

(a) A Japanese fast food restaurant, OiShi is concerned about its ability to provide quality service as they continue to grow and attract more customers. Its management has collected data from Friday and Saturday nights, its busiest times of the week. During these nights, about 75 customers arrive per hour for service. Given the number of tables and chairs, and the typical time it takes to serve a customer, the restaurant can serve on average about 100 customers per hour.

Analyse the restaurant service process in these nights where the data are collected and comment on whether the services are in the zone of service, the critical zone, or the zone of non-service? (Refer to Figure 2 when providing your answers)

Figure 2: Relationship between the Rate of Service Utilisation (r) and service quality

(4 marks)

The management anticipates that the restaurantâs demand will double in one year as long as it can provide good service to its customers. How much will the restaurant have to increase its service capacity to stay out of the critical zone?

(4 marks)

(b) Describe the characteristics of service processes of a typical fast food restaurant based on your service encounters.

(10 marks)

(c) Examine the strategies to manage service encounters. You should provide details on any TWO (2) possible customer-introduced variability in the service processes and propose THREE (3) accommodating strategies to effectively address these variabilities.

(7 marks)

Question 3

(a) Consider your organisation or one that you are familiar with that plays a role in the global supply chain network. This organisation can be a supplier, manufacturer, distributor, logistics service provider or retailer in a particular industry (e.g. fast-moving consumer goods, electronics, oil and gas, and pharmaceuticals). In your answer, you should relate the concepts and strategies in operations and supply chain management to the work environment.

Explain how the aggregate operations plan can help match supply with demand and optimise operational costs in this organisation.

(4 marks)

Provide TWO (2) strategies that can be used to influence demand and TWO (2) strategies that can be used to adjust capacity to match demand.

(8 marks)

(b) The development of web-based tools has allowed companies to collaborate on a larger scale and perform its operations and supply chain activities with greater ease. Demonstrate how collaborative techniques can be used to forecast demand. You should provide details such as the various stages of activities that are involved.

(8 marks)

Discuss the risks of being too reliant on the internet as a collaboration tool in demand forecasting and management.

(5 marks)

Question 4

Kee Wah Store sells a variety of exquisite European cookies and candies to the consumer market. The demand for cookies and candies is volatile and varies from month to month. The store orders from its suppliers. The lead time is normally one month, mainly consisting of the sea freight transportation time from Europe to Singapore. The store keeps a certain level of inventory at its warehouse.

The total demand for chocolate cookies is estimated to be 7,200 packets a year. The chocolate cookie packet is sourced from the supplier at $5 per packet and is sold to the end consumer at $15 per packet. It costs $100 to place an order to the supplier, and costs 20% of unit cost to store a packet of chocolate cookies for one year.

(a) Give FOUR (4) reasons why Kee Wah Store needs to maintain some inventory at its warehouse.

(8 marks)

(b) Examine the inventory situation for Kee Wah Store by applying the EOQ model to solve for order quantity and reorder point. What is the annual ordering cost, annual holding cost and total annual cost?

(10 marks)

(c) One supplier, Nee Ann Import Inc., approaches Kee Wah Store and proposes that it could shorten the lead time from one month to one week using airfreight.

What are the factors that Kee Wah Store needs to consider before deciding to accept or reject Nee Ann Importâs offer?

----- END OF PAPER -----

(7 marks)

jadeserval468

1. Denver Doughnuts is considering a new store location. For accounting purposes, fixed operating costs for a store are $23.500 a year, and variable costs are 40 percent of sales. Compute the breakeven sales level for a store location.

a. If average revenue per customer is $1.40, how many customers must be served each hour to break even in earnings? (The stores are open twenty four hours a day. 306 days a year.)

b. If the price (only) is raised 10 percent, what will be the new earnings break-teen point?

2.For Denver Doughnuts (problem 3), fixed cash outlays art $18,750 a year at each location, and variable cash outlay are 40 percent of sales. A store requires initial outlay of $60,000, and the company uses 14% required return. Because of changing neighborhood characteristics, the company does its analysis based on a 10-year store life. Since the locations are leased, the terminal value is minimal. Ignore taxes for simplicity.

a. What annual sales volume will be needed to generate a net present value of $0?

b. The after tax risk free interest rate is 6%. What annual sales value will be needed to generate a net present value of $0 using 6% discount rate?

Salt Lake Systems is a small company started by two recent college graduates to market a small-business inventory management system they developed and patented as a class project. The system requires a special hard disk drive that plugs into a microcomputer. Buy and Modify Alternative: With this alternative, Salt Lake Systems would buy standard hard-disk systems at $2,200 and then modify them at a cost of $900 each. Annual fixed cash outlays for the modification operation would be $50,000. Capital investment requirements will be $30,000 to modify. Build Alternative: Under this alternative, Salt Lake Systems would construct the special hard-disk system from scratch. Component pans can be readily purchased, and the production process is not complex. The variable cost to build each special hard-disk system would be $2,000. Annual fixed cash outlays for the building alternative would be $100,000. Capital investment requirements will be $60,000 to build.

Salt Lake Systems plans to price the systems at $4,995 each because they have a patent and proprietary software. The partners estimate that they can complete 100 units a year, either building or modifying. Potential demand could be for thousands of units a year, but could also be only a fraction of capacity. The partners do not have enough information to estimate probabilities and cannot afford market research. They recognize that technology changes rapidly and, therefore, use a 3-year life for analysis. The cost of capital is 12 percent, and the partners are not subject to income tax. Use net present value break-even analysis to recommend a production method.

redgiraffe616

1.When the term "price" is used in the law of demand, price refers to Select one:

a. the price of the well relative to the price of another good.

b. the nominal price of the well relative to its nominal price in the previous year.

c. the absolute price of the good.

d. the dollar price of the good.

2.In economics, the meaning of demand refers to Select one:

a. the quantities of a good that people will sell at various prices.

b. the total satisfaction that consuming good provides people at different prices.

c. how badly someone wants a good.

d. the quantities of a good that people will buy at various prices.

3.Which of the following illustrates the law of demand?

Select one:

a. College enrollment increases when federal tuition grants are readily available to students.

b. More people watch college basketball in March than in November.

c. The number of long-distance calls in the United States is greater on Christmas than on Valentine's Day.

d. The prevailing wage rate in an industry determines how many people choose to work in the industry.

4.The absolute price of a good is its

Select one:

a. money price.

b. projected price.

c. relative price.

d. subjective price.

5.The only variable that can affect a movement along the demand curve is

Select one:

a. the number of buyers.

b. income levels.

c. the price of the good itself.

d. the number of substitutes.

6.The price of an MP3 music player increased from $50 to $70 while the price of a music download increased from $1 to $2. The relative price of an MP3 music player in terms of music downloads Select one:

a. increased from 0.04 to 0.05.

b. decreased, but we need more information to know by how much.

c. increased, but we need more information to know by how much.

d. decreased from 50 to 35.

7.The quantity supplied of a particular good is the amount of the good that

Select one:

a. households want firms to sell at each price during a particular time period.

b. firms will actually end up buying at a particular price during a given time period.

c. firms are willing to sell at each price during a particular time period.

d. households are willing to consume at each particular price.

8.An increase in price will lead to an increase in quantity supplied. This statement is

Select one:

a. the law of supply.

b. untrue always.

c. the law of demand.

d. a normative statement.

9.Regarding the law of supply, which of the following statements is correct?

Select one:

a. As demand falls, supply rises.

b. The ceteris paribus assumption does not apply.

c. As the price of a good or service rises, the quantity supplied will increase.

d. As the price of a good or service rises, the quantity supplied will decrease.

10.A given supply curve illustrates Select one:

a. the relationship between expected future prices and quantity supplied.

b. the effect of a change in resource costs on the quantity supplied.

c. the effect of a change in technology on the quantity supplied.

d. the relationship between price and quantity supplied.

11.If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)

Select one:

a. decrease in the supply of ice cream and a leftward shift of the supply curve.

b. increase in the supply of ice cream and a rightward shift of the supply curve.

c. increase in the quantity of ice cream supplied and a movement down along the supply curve.

d. decrease in the quantity of ice cream supplied and a movement up along the supply curve.

12. An improvement in technology in the production of computers would

Select one:

a. increase the demand for computers.

b. decrease the supply of computers.

c. decrease the demand for computers.

d. increase the supply of computers.

13.Which of the following is a non-price determinant of supply? Select one:

a. the number of consumers

b. technological advances in production

c. the price of related goods consumers may buy

d. consumers' incomes

14.Which of the following does NOT cause a rightward shift in the supply curve?

Select one:

a. a reduction in resource costs

b. an increase in technology

c. a reduction in the expected future price of the good

d. a reduction in the price of the good

15.Which of the following is a possible outcome of setting a legal maximum rental rate below the market-clearing rental rate?

Select one:

a. a decrease in the quantity of rental housing demanded

b. an increase in the quantity of rental housing supply

c. a black market in rental housing

d. a surplus of rental housing

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ADM 3301 : forecastingtimeseriesdemand.doc

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