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	44	35	36	58	36	35	45	46	30	53	34	22	58	45	42	30	56	35
Boston	61	19	44	37	34	29	33	38	38	45	42	55	28	61	46	33	44	45
Chicago	52	27	65	35	42	43	35	25	45	45	66	64	34	25	92	36	44	46
Dallas	38	26	36	54	44	28	33	36	40	44	55	65	61	46	39	35	38	42
LA	39	42	45	36	38	39	43	46	45	46	65	43	34	40	45	45	50	50
Total	234	149	226	220	194	174	189	191	198	233	262	249	215	217	264	179	232	218

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.)

3-week MA

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.)