QUESTION 1
(a) Explain the meaning of forecasting. Support your answer by means of appropriate examples in the business context
(b) Deliberate the strategic importance of forecasting
(c) Sales of automobile batteries have grown progressively during the past five years, as shown by the table below.
|
Year
|
Sales
|
|
1
|
450
|
|
2
|
495
|
|
3
|
518
|
|
4
|
563
|
|
5
|
584
|
|
6
|
?
|
The sales manager had predicted previously the business started, that year 1's sales would be 410 air conditioners.
(i) Using smoothing constants of 0.6 and 0.9, develop a forecast for the sales of
Cool- Man air conditioners for years 2 through 6. (Use Ft = Ft-1 + α ( At-1 - Ft-1 )
(ii) Define which smoothing constant gives the most accurate forecast.
QUESTION 2
(a) Describe three basic functions of inventory
(b) Describe understand by the term Economic Order Quantity (EOQ)?
(c) Sketch three assumptions made in the analysis of the EOQ model.
(d) A distributor of electronic components, has a contract with a manufacturer to be supplied with 9600 units per year to a dealer. The distributor estimates that the cost is $50 every time an order is placed while the annual holding cost is estimated to be 50% of the unit price.
The company is negotiating with the manufacturer for the following quantity discounts:
|
Lot size per order
|
Price per unit
|
|
1 - 499
|
$ 17.00
|
|
500 - 999
|
$ 16.75
|
|
1000+
|
$ 16.50
|
(i) Define the economic order quantity?
(ii) Define the optimal order quantity?
(iii) Define the total annual inventory cost?
QUESTION 3
(a) Explain the meaning and importance of operations management. Support your answer by appropriate examples
(b) By referring to an organization of choice, define the Input/Transformation
Process/Output Model used in operations management