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# BU385 MT1-F12-Solution.doc

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Wilfrid Laurier University

Business

BU385

Mark Wagner

Fall

Description

WILWATERLOO, ONTARIOERSITY
BU385 - Operations Management I
Fall 2013 Mid-Term Exam I
Open Questions
NAME:
I.D. # :
Indicate your section with an "X" in the appropriate box
Section Instructor Section
A1 H
A2 J
B K
C L
D M
E N
F P1
G
NUMBER OF PAGES: 6 pages (Not including the Cover and
Instruction pages
LENGTH OF EXAMINATION: 2 hours
EXAMINATION AIDS ALLOWED:One 8½” x 11” double-sided formula sheet,
Calculator
Q1 Q2 Q3 Q4 Q5 Total Mark
(out of 3) (out of 5) (out of 9) (out of 5) (out of 3) INSTRUCTIONS:
1 Your examination paper must be handed in at the front of the exam room
before you leave. Only your formula sheet may be taken from the room.
When you are finished please leave the exam room quietly.
2 Cheating on an examination will result in an “F” grade in the course
concerned and possible suspension from the University.
3 All notes, except your formula sheet, briefcases, and books must be
deposited at the front of the room.
4 Count the pages to be certain that there are no pages missing.
5 Do not begin this examination until you are instructed to do so.
TM
6 Multiple Choice answers must be transferred to the ParSCORE sheets
supplied.
7 DO NOT REMOVE THE STAPLE OR ANY PAGES. There will be an
additional penalty of 10 marks for each page missing. Question 1 (3 marks)
A computer software firm is looking at the demand for its “Personal Finance” software
package for the past 5 periods and its forecasts. The following table gives the data.
Period Demand Forecast - Exponential Forecast - Trend adjusted
smoothing exponential smoothing
1 56 S t T t TAF t
2 61 56 56 2.4 56
3 55 58 57.04 2.13 58.4
4 70 56.8 ( 1 mark) (1 mark) (1 mark) 59.17
a. Determine the forecasts for period 4 using exponential smoothing with α=0.4. (1
mark)
b. Determine the forecasts for period 4 using trend adjusted exponential smoothing
with α=0.4 and β=0.2. (2 marks)
(marks as above -1 mark if TAF is4wrong )
3 Question 2 (5 marks)
Great Big Industries uses a monthly focus forecasting system consisting of two different
forecasting techniques ("Technique A" and "Technique B"). The following table shows the
performance of these two forecasting techniques over the last 4 months.
Month Actual Forecast |Error| |Error|/D Forecast |Error| fo|Error|/D
Demand Technique Forecast For ForecasTechnique B Technique For Technique
D A Technique Technique A B B
A
1 160 170 10 0.063 165 5 0.031
2 155 160 5 0.032 162 7 0.045
3 175 165 10 0.057 160 15 0.086
4 185 175 10 0.054 175 10 0.054
5 190 195 5 0.026 182 8 0.042
40 0.232 45 0.258
a. If the forecast for Month 6 is based on the MAD of the previous five months, which
forecasting method would be used? Support your answer with appropriate
calculations. (2 marks)
Technique A: MAD = 40/5 = 8 (0.5 mark)
Technique B: MAD = 45/5 = 9 (0.5 mark)
( Use Technique A) ( 1 mark)
b. If the forecast for Month 6 is based on the MAPE of the previous five months,
which forecasting method would be used? Support your answer with appropriate
calculations. (2 marks)
Technique A: MAPE = (0.232/5)X100 = 4.64% (1 mark)
Technique B: MAPE = ( 0.258/5)X100 = 5.16% (1 mark)
( Use Technique A) ( - 1 mark if incorrect conclusion)
c. The operations manager has suggested that Technique A and Technique B should
NOT be used. Rather, she feels that they should be replaced by either a four-period
moving average or a trend-adjusted exponential smoothing model with α = 0.3 and
β = 0.7. Which of these two forecasting methods (four-period moving average or
trend-adjusted exponential smoothing) would you expect to give the more accurate
forecast for Month 6? Justify your answer. No calculations are required. (1 mark)
Use Trend-Adjusted since there is obvious trend in demand data
( 1 mark ONLY if correct explanation )
4 Question 3 (9 marks)
The operations manager of the Elora Ice Cream Company has been tracking quarterly
demand for all of its products in an attempt to forecast future demand for milk. His
objective is to ensure that productive capacity, more specifically, the size of the incoming
bulk milk tank, meets or exceeds what is required to address future trends in
consumption. To that end, the manager has accumulated the following quarterly data:
Year Quarter Demand for Use this Enter your
Milk column for final answer in
(Millions of rough this column
Litres) calculations
if needed
2009 Q1 10.4
Q2 9.6
Q3 13.1
Q4 11.0
2010 Q1 11.3
Q2 9.8
Q3 13.5 11.5625 Q3-2010
Q4 11.5 11.6375 Q4-2010
2011 Q1 11.6 11.7625 Q1-2011
Q2 10.1

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