## 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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