Engineering Principles

Grade____________

[pic 1]

BUS5461

Production/Operations Management

HW 2

Spring 2016

Feb 4, 2016

Due: Feb 18, 2016

Your Name_______________________________

I have neither given nor received unauthorized aid on this quiz.

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Note: The following questions require the use of Excel. Where forecast and error series are requested, your answers should be in tabular form. Display your answers as directed by each question.

1. (Moving average and weight moving average) As the buyer of sugar and cocoa for Sweeter Sweets you are responsible for ensuring a steady supply of each for the production of candy. Unfortunately, El Niño and La Niña weather patterns over the last year have negatively impacted the quantity of cocoa available on the market. Your supplier, South American Cocoa Unlimited, has promised to supply the needed cocoa if you provide an accurate forecast for the next month. Sweeter Sweets cocoa usage in thousands of pounds for the last twelve months is shown below.

1. Using a 3-month simple moving average, estimate the forecast of cocoa consumption for months 4-12; then generate a forecast for month 13. Your spreadsheet should contain columns for month, actual demand, forecast, error, and absolute error. Display your answer to one decimal place.
2. Create a second forecast using a 3-month weighted moving average with weights of .5, .3, and .2 (from the most recent to the least recent respectively) for months 4-12; then generate a forecast for month 13. Display your answer to one decimal place.
3. Compute the Mean Absolute Deviation (MAD) for the forecasting methods in parts (a) and (b). Display your answer to one decimal place. Based on these error calculations, which forecast methodology, should you use to place your order for cocoa? During a weekly status meeting your supervisor asks you to explain why you selected the forecasting method. What do you tell her?