Analytics Exercise 18-1 (Algo)

Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the stores might appear to be very similar, they are actually very different. Depending on the location of the store, its size, and the profile of the customers served, Starbucks management configures the store offerings to take maximum advantage of the space available and customer preferences.

Starbucks actual distribution system is much more complex, but for the purpose of our exercise lets focus on a single item that is currently distributed through five distribution centers in the United States. Our item is a logo-branded coffeemaker that is sold at some of the larger retail stores. The coffeemaker has been a steady seller over the years due to its reliability and rugged construction. Starbucks does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 13 weeks is shown in the following table. (week 1 is the week before week 1 in the table, 2 is two weeks before week 1, etc.).

Management would like you to experiment with some forecasting models to determine what should be used in a new system to be implemented. The new system is programmed to use one of two forecasting models: simple moving average or exponential smoothing.

WEEK	5	4	3	2	1	1	2	3	4	5	6	7	8	9	10	11	12	13
Atlanta	42	34	32	54	34	32	45	35	33	54	26	20	58	45	36	25	55	41
Boston	61	25	48	41	33	35	33	40	41	45	46	54	24	60	45	32	45	52
Chicago	55	20	68	42	44	45	33	25	52	48	68	64	28	24	96	35	44	47
Dallas	40	35	38	62	45	28	28	34	40	50	62	68	62	50	40	35	43	42
LA	42	41	53	43	38	33	42	48	44	46	65	40	34	46	38	45	52	48
Total	240	155	239	242	194	173	181	182	210	243	267	246	206	225	255	172	239	230

a. Consider using a simple moving average model. Experiment with models using five weeks and three weeks past data. (Round your answers to 2 decimal places.)

5-week MA

b. Evaluate the forecasts that would have been made over the 13 weeks using the overall (at the end of the 13 weeks) mean absolute deviation, mean absolute percent error, and tracking signal as criteria. (Negative values should be indicated by a minus sign. Round all answers to 2 decimal places. Enter "MAPE" answers as a percentage rounded to 2 decimal places.)

3-week MA

ATL BOS CHI DAL LA Total NO Week 1 2 2 3 4 5 6 7 8 9 10 11 12 13 5-week MA Week ATL BOS CHI DAL LA Total 1 2 3 4 5 6 7 8 9 10 11 12 13 ATL BOS CHI DAL LA Avg of DCS 3-week MA MAD MAPE TS MAD MAPE TS 5-week MA