Problem 1 A firm uses simple exponential smoothing with alpha of 0.1 to forecast demand. The forecast for the week of February 1 was 500 units, whereas actual demand turned out to be 450 units. (a) Forecast the demand for the week of February 8. (b) Assume that the actual demand during the week of February 8 turned out to be 505 units. Forecast the demand for the week of February 15. Continue on forecasting through March 15, assuming that subsequent demands were actually 516, 488, 467, 554, and 510 units. Problem 2 An office supply store open 5 days a week must determine the best inventory policy for boxes of copier paper. Weekly demand is nearly constant at 250 boxes and when orders are placed, then entire shipment arrives at once. The cost per box is $22 and the inventory holding cost is 30%. Orders are placed at a cost of $40 each, including preparation time and communication charges, and the lead time is 2 days. a. Find the optimal order quantity. b. What is the reorder point? c. How often should an order be placed? d. What is the cycle time? Problem 3 Using the factor ratings shown below, determine which location alternative should be chosen on the basis of maximum composite score. Location Factor Weight A B C Easy access 0.15 86 72 90 Parking facilities 0.2 72 77 91 Display area 0.18 86 90 90 Shopper (walking) traffic 0.21 94 86 80 Neighborhood wealth 0.16 99 89 81 Neighborhood safety 0.1 96 85 75 Problem 4 A telecommunications firm is planning to lay fiber optic cable from several community college distance learning sites to a central studio, in such a way that the miles of cable is minimized. Some locations require more than one set of cables (these are the loads). Where should the studio be located to accomplish the objective? College Map Coordinate (x, y) Load A (2,10) 3 B (6,8) 2 C (4,9) 4 D (9,5) 1 E (8,1) 3 F (3,2) 2 G (2,6) 1 Problem 5 Jack Bennetton, manager of the Sandy Bottom Grocery Store, is concerned that his stock clerks are mispricing items. For those items stocked during the last eight hours, he has counted 32 that were mispriced. What would be the 99.7% control limits on this process? BIDS(64)


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