5.

22 Sales of Cool-Man air conditioners have grown steadily during the past 5 years:

YEAR SALES YEAR SALES

1 450 4 563
2 495 5 584
3 518 6 ?

The sales manager had predicted, before the business started, that year 1’s sales would be 410 air conditioners. Us
a = 0.30, develop forecasts for years 2 through 6.

Year Actual Sales Forecast using a=0.3

1 450 410.00
2 495 422.00
3 518 443.90
4 563 466.13
5 584 495.19
6? 521.83

5.23
Using smoothing constants of 0.6 and 0.9, develop forecasts for the sales of Cool-Man air conditi

Year Actual Sales Forecast using a=0.6 Forecast using a=0.9

1 450 410.00 410
2 495 434.00 446.00
3 518 470.60 490.10
4 563 499.04 515.21
5 584 537.42 558.22
6? 565.37 581.42

5.25 Use a 3-year moving average forecasting model to forecast the sales of Cool-Man air condition

Three Year Moving

Year Actual Sales Average
1 450
2 495
3 518
4 563 487.67
5 584 525.33
 6? 555.00

5.3 Emergency calls to Winter Park, Florida’s 911 system for the past 24 weeks are as follows:

Week Calls Week Calls

1 50 9 35
2 35 10 20
3 25 11 15
4 40 12 40
5 45 13 55
6 35 14 35
7 20 15 25
8 30 16 55

Week Actual Calls Forecast at a=0.1 Forecast at a=0.6

1 50 50 50
2 35 50.00 50.00
3 25 48.50 41.00
4 40 46.15 31.40
5 45 45.54 36.56
6 35 45.48 41.62
7 20 44.43 37.65
8 30 41.99 27.06
9 35 40.79 28.82
10 20 40.21 32.53
11 15 38.19 25.01
12 40 35.87 19.00
13 55 36.28 31.60
14 35 38.16 45.64
15 25 37.84 39.26
16 55 36.56 30.70
17 55 38.40 45.28
18 40 40.06 51.11
19 35 40.05 44.44
20 60 39.55 38.78
21 75 41.59 51.51
22 50 44.93 65.60
23 40 45.44 56.24
 24 65 44.90 46.50
25 46.91 57.60

MAD

6-20.

Lila Battle has determined that the annual demand for number 6 screws is 100,000 screws. Lila, who wor
She estimates that it costs $10 every time an order is placed. This cost includes her wages, the cost o
Furthermore, she estimates that the cost of carrying one screw in inventory for a year is one-half of 1 ce

(a) How many number 6 screws should Lila order at a time if she wishes to minimize total inve
(b) How many orders per year would be placed? What would the annual ordering cost be?
(c) What would the average inventory be? What would the annual holding cost be?

Solution
D = Annual Demand = 100,000 screws
Order Cost = $10
Carrying Cost = 0.0050 cents

EOQ = sqrt (2*D*Co/Ch) 20,000

Numbers of orders per year = D/Q 5

Annual ordering Cost 50

Average Inventory 10000

Annual holding cost $50.00

6-27.

Ross White’s machine shop uses 2,500 brackets dur_x0002_ing the course of a year, and this usage is
pur_x0002_chased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holdin
and the ordering cost per order is $18.75. There are 250 wor

(a) What is the EOQ?

(b) Given the EOQ, what is the average inventory? What is the annual inventory holding cost?
(c) In minimizing cost, how many orders would be placed each year? What would be the annu
(d) Given the EOQ, what is the total annual inven_x0002_tory cost (including purchase cost)?
(e) What is the time between orders? (f) What is the ROP?

D = 2500
Purchasing Cost = $15
Lead Time = 2 days
Ch = $1.50
Co = $18.75

EOQ 250 Brackets

Average Inventory 125 brackets

Annual Inventory HC 187.5

Number of Orders Per year 10

Annual Ordering Cost 187.5

Total Annual Cost = Annual Order Cost + Annual Holding Cost + Purchasing Cost
$37,875.00

Time Between Orders = Working Days/No. of orders per year

25 working days

ROP = Demand per day * Lead time of new orders

20 brackets
d be 410 air conditioners. Using exponential smoothing with a weight of
ears 2 through 6.

sales of Cool-Man air conditioners (see Problem 5-22)

es of Cool-Man air conditioners (see Problem 5-22).

weeks are as follows:

Week Calls
17 55
18 40
19 35
20 60
21 75
22 50
23 40
24 65

Absolute Deviation for 0.1 Absolute Deviation for 0.6 forecast squared 0.1
0.00 0.00 0.00 0.00 0.00
15.00 15.00 -15.00 -15.00 225.00
23.50 16.00 -23.50 -16.00 552.25
6.15 8.60 -6.15 8.60 37.82
0.53 8.44 -0.53 8.44 0.29
10.48 6.62 -10.48 -6.62 109.86
24.43 17.65 -24.43 -17.65 596.99
11.99 2.94 -11.99 2.94 143.76
5.79 6.18 -5.79 6.18 33.54
20.21 12.53 -20.21 -12.53 408.52
23.19 10.01 -23.19 -10.01 537.81
4.13 21.00 4.13 21.00 17.04
18.72 23.40 18.72 23.40 350.27
3.16 10.64 -3.16 -10.64 9.96
12.84 14.26 -12.84 -14.26 164.88
18.44 24.30 18.44 24.30 340.17
16.60 9.72 16.60 9.72 275.54
0.06 11.11 -0.06 -11.11 0.00
5.05 9.44 -5.05 -9.44 25.55
20.45 21.22 20.45 21.22 418.24
33.41 23.49 33.41 23.49 1115.95
5.07 15.60 5.07 -15.60 25.66
5.44 16.24 -5.44 -16.24 29.61
 20.10 18.50 20.10 18.50 404.12

304.75 322.90 -30.93 12.66 5822.81

12.19 12.92 -1.29 0.53 242.617158726095
MSE

00,000 screws. Lila, who works in her brother’s hardware store, is in charge of purchasing.
ncludes her wages, the cost of the forms used in placing the or_x0002_der, and so on.
for a year is one-half of 1 cent. Assume that the demand is constant throughout the year.

wishes to minimize total inventory cost?

annual ordering cost be?
al holding cost be?

number 6 screws to order

per year

units
per year

e of a year, and this usage is relatively constant throughout the year. These brackets are
ad time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost),
is $18.75. There are 250 working days per year

nual inventory holding cost?

ar? What would be the annual ordering cost?
t (including purchase cost)?
urchasing Cost
 0.6 0.10 0.6
0.00 0.00 0.00
225.00 42.86 42.86
256.00 94.00 64.00
73.96 15.38 21.50
71.23 1.19 18.76
43.88 29.95 18.93
311.51 122.17 88.25
8.64 39.97 9.80
38.14 16.55 17.65
156.99 101.06 62.65
100.24 154.60 66.75
440.80 10.32 52.49
547.47 34.03 42.54
113.23 9.02 30.40
203.24 51.36 57.03
590.37 33.53 44.18
94.46 30.18 17.67
123.49 0.15 27.78
89.21 14.44 26.99
450.37 34.08 35.37
551.72 44.54 31.32
243.50 10.13 31.21
263.80 13.60 40.60
 342.37 30.93 28.47

5339.62 934.03 877.17

222.4841 38.92 36.55
MAPE