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Exam $3$

Q$1$: Delta, the airline company, decides to operate flights on a new route: from city Monica to city Chandler. It decides to use the past data on air traffic in an existing route $$ from city Ross to city Rachel $$ in order to forecast demand for its new flight$-$leg. Give one reason in favor of this forecast strategy, and one reason against this forecast strategy.

$[0\mathrm{.}5+0\mathrm{.}5=1$ point$]$

Q$2$: Focusing on hotel industry, provide an example in support of the statement: "Forecast is more accurate for groups of items than for individual items." $($In $500$ characters or less.$)$

$[1$ point$]$

Q$3$: The two curves in the figure below have a strong relationship in terms of when $"$X$"$ decreases, Y "decreases." But one should use caution in drawing conclusions from this relationship. Why? $($In $500$ characters or less.$)$

$[1$ point$]$

Q$4$: If there is a non$-$zero lead time for delivery of a product, the optimal order quantity calculated from EOQ model $\_\_\_\_\_$ when compared to the ordering quantity calculated for a zero lead time.

$[1$ point$]$

Q$5$: Due to certain market$-$related reasons, the demand of a particular item falls to a quarter of its original value. What change would you make in the ordering quantity of that item $($assuming everything else in the EOQ model remains same$)?$

$[1$ point$]$

Q$6$: Based on the inventory analysis shown below $($in table with numbers and colors$),$ please list any two observations related to inventory management. $($In $750$ characters or less.$)$

$[1$ point$]$

Q$7$: Given that India is fast emerging as a lucrative market for Tesla, Tesla decides to set up a manufacturing plant locally in India. Two potential benefits of this move are: Low production cost $($lower wages$)$; Low transportation cost $($closer to market$).$

Please list two potential concerns of this proposed offshoring move by Tesla. $($In $1000$ characters or less.$)$