PLEASE DON'T USE MOVING AVERAGE METHOD

Mary is the manager of the Alpha company in the grocery industry. The major role of Alpha company is working as a grocery distributor though the company also produces some products. There are 4 products W, X, Y, and Z caused a lot of troubles for Mary in the past several years since the inventory and sales records were not available. From 2020 with the investment of IT and supply chain infrastructure, Mary can continuously monitor the sales and inventory information of these 4 products. It was the end of 2020. Mary had collected all 2020 weekly sales data and order history for these 4 products shown in the attached spreadsheet. This file also includes the historical order information for every weeks order in 2020. Mary wanted to use scientific ways to forecast demand and manage inventory for these 4 products. She decided to assign a project to Jason who has worked in the company for several years and just got his MBA degree from UNC Pembroke last year. Consider yourself as Jason to figure out what to do from this point

1. Mary hoped Jason can determine which forecast methods will be appropriate for each of these 4 products. Moreover, Jason should provide the demand forecast for the first 4 weeks of 2021 for each of these 4 products so Mary can test Jasons method in the first month of 2021. (25 points) 2. After building a scientific way for demand forecasting, Mary hoped Jason can propose the optimal inventory/ordering policies for these 4 products for the first week of 2021. The sale price/unit for each product is listed below: Product W Product X Product Y Product Z $220 $50 $5 $3

Jason decided to use ABC rule to classify these 4 products. A category product(s) will have the target service level of 95%. B product(s) will have the target service level 90% and C products(s) will have the target service level 85%. After setting the appropriate service level, Jason will use the service level information to calculate the safety stock level for each product. a) How should Jason classify the ABC products? (10 points) b) After classifying these 4 products, Jason wanted to use the ROP model for inventory/ordering management. He believed he would get an accurate demand forecasting for the first week of 2021. But based on the historical data. The attached spreadsheet document includes the order information for 2020. The company places the order of all products on each Wednesday. Jason found the

lead time of orders has variations for all these 4 products. Which ROP model should Jason implement?

c) What are the reorder points for each of these 4 products for the first week of 2021?

3. Product E is a new product and manufactured by the Alpha company itself. This product was introduced to the market in July 2020 and the feedback of the market was very positive. Mary had provided the 2020 historical sale data of product E in the attached file. She wanted Jason to determine the optimal production plan for the first 4 weeks of 2021 for product E. Some information is given here: 2020 last weeks output =2,800 Beginning inventory = 0 Inventory holding cost = $40 per unit per week Hiring employees = $40 per unit Terminating employee = $80 per unit Subcontracting cost =$60 per unit Unit cost on regular time = $30 per unit Overtime cost = $15 extra per unit

Jasons job is to develop an aggregate plan. The three initial options he wants to evaluate are: a. Plan A: a chase strategy that hires and fires personnel as necessary to meet the forecast. b. Plan B: a level strategy. c. Plan C: a level strategy that produces 2,800 units per week and meets the forecast demand with inventory and subcontracting. Which strategy Jason should choose to get the lowest expected cost?