Operations Management- Exponential Smoothing and Location Strategies,

2

>Problem 1

Exponential smoothing is used to forecast automobile battery sales. Two value of α are examined, α = 0.8 and α = 0.

5

Evaluate the accuracy of each smoothing constant. Which is preferable? (Assume the forecast for

January

was

22

batteries.) Actual sales are given below:

Forecasting Table

MonthActual Battery SalesForecastJanuary

22

20
February	21
March	15
April	14
May	1			3
June	1	6

Problem 2

Coffee Palace’s manager, Joe Felan, suspect that demand for mocha latte coffees depends on the price being charged. Based on historical observations, Joe has gathered the following data, which shows the numbers of these coffees sold over six different price values:

Price Number Sold$2.70 760$3.50 5

10

$2.00 980$4.20 250$3.10 320$4.05 480

Using these data, how many mocha latte coffees would be forecast to be sold according to simple linear regression if the price per cup were $2.80?

Discussion 3

Answer the following question:

Balfour’s is considering building a plant in one of three possible locations. They have estimated the following parameters for each location. For what unit sales volume should they choose each location?

Possible Plant Locations

LocationFixed CostVariable Cost

Waco, Texas	$300,000	$5.75
Tijuana, Mexico	$800,000	$2.75
Fayetteville, Arkansas	$100,000	$8.00

Module 3 Exercise

Complete the following Location Strategy problem:

Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center.

Location Table

Store LocationsMap Coordinates (x,y)Truck Round Trips per Day

3

3

2

6

5

3

10

Mesa	(10,5)
Glendale	(3,8)
Camelback	(4,7)
Scottsdale	(15,10)
Apache Junction	( 13 ,3)
Sun City	(1,12)
Pima	(5,5)

Instruction:

-There are 4 total questions overall, make sure they are answered in order.

-Please do this in a word document.

-Please make sure that all the workings are shown and no other software has been used to get the answers.

-Do not copy and paste tables or pictures from any other sources (even excel), make sure they are all the workings are done manually on a word document.