Cutting-edge Computer Company (3C) serves a large number of businesses in the Great Lakes region. 3C sells

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Cutting-edge Computer Company (3C) serves a large number of businesses in the Great Lakes region. 3C sells supplies and replacements and performs service on all computers sold through seven sales offices. Recently, business has been increasing, and because many items are stocked, close inventory control is necessary to assure customers of efficient service. A forecasting method is needed to estimate requirements several months in advance so that adequate replenishment quantities can be purchased. An example of the sales growth experienced during the last 50 months is the growth in demand for item EP-37, a laser printer cartridge.
a. Develop a trend projection with regression. Forecast demand for month 51.
b. A consultant to 3C's management suggested that new office building leases would be a good leading indicator for company sales. The consultant quoted a recent university study finding that new office building leases precede office equipment and supply sales by 3 months.
According to the study findings, leases in month 1 would affect sales in month 4, leases in month 2 would affect sales in month 5, and so on. Develop a linear regression module to forecast sales, with leases as the independent variable. Forecast sales for month 51.
c. Which of the two models provides better forecasts? Explain.
Cutting-edge Computer Company (3C) serves a large number of businesses
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Foundations Of Operations Management

ISBN: 9780133251661

4th Canadian Edition

Authors: Larry P. Ritzman, Lee J. Krajewski, Manoj K. Malhotra, Robert D. Klassen

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