Question # 1: (6 Points)
Describe the differences between level, chase, and mixed production plans. Use the forecast in the table to show the differences by creating a plan of each type. There is no beginning inventory and regular production capacity is 350 units. Overtime costs $10 extra and is limited to 50 units per month. Subcontracting is limited to 100 units per month and costs $15 per unit. Back orders cost $40 per unit and there is a cost of $5 per month to hold a unit in inventory. There is room for only 100 units in inventory.

Month Forecast
January 250
February 300
March 500
April 350
SOLUTION:

 

 

 

 

 

 

 

Question # 2: (4 Points):

Develop forecasts for periods 7 through 10 for the demand data in the table using a three period moving average, a weighted moving average using 0.6, 0.3, and 0.1, and exponential smoothing with alpha = 0.7. Use a 6th period forecast of 135 as the starting point for the exponential smoothing technique. You need to fill the table starting from period 7, and show the equation used and one calculation example for each of the three models.

Period Actual MA n = 3 WMA Exp. Smoothing
1 64
2 84
3 91
4 97
5 115
6 135
7 137
8 144
9 153
10 171

SOLUTION:

 

 

 

 

 

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