QUESTION 1:

Based on the demand data below, use the weighted moving average method with weights of 5, 3, 1 for D_t-1, D_t-2, and D_t-3 respectively, to find the forecast of 2023? (enter your answer to the nearest tenth)

Data:

• 2020 actual demand: 31
• 2021 actual demand: 33
• 2022 actual demand: 45

Your Answer:

QUESTION 2:

The company has been concerned with the continued fluctuations in monthly demand witnessed over the past year. The company has a policy of using the exponential smoothing method for forecasting but alternates its use of smoothing constants, depending on the demand pattern. The two constants it uses are 0.42 and 0.78 but because your manager is on vacation, you do not receive any guidance. So you have to think back to your days in university to select the alpha that is more appropriate to use in a stable demand environment . Using this appropriate smoothing factor, calculate the forecast of November. (enter your answer to the nearest tenth, i.e., report one decimal point)

Data:

• September actual demand: 202 and forecast 215
• October actual demand: 206
• November forecast?

Your Answer:

QUESTION 3:

A company is deciding if it should design a product in-house or outsource the design. Because this new product will not require the company to add resources, management is only interested in the annual contribution margin expected to be earned. The details of each option are as follows:

1. In-house
   • Plan to sell 189971 units per year
   • Each unit will sell for $12
   • The probability that the design will result in a variable cost of $8 for each unit is 0.3
   • If the company cannot reach its low cost target, the cost is estimated to be $10 for each unit
2. Outsource
   • Plan to sell 189971 units per year
   • Each unit will sell for $12
   • The probability that the design will result in a variable cost of $7 for each unit is 0.3
   • If the company cannot reach its low cost target, the cost is estimated to be $10 for each unit

To the nearest whole dollar, what is the expected profit if the company decides to design the item internally?

Your Answer:

QUESTION 4:

A company is deciding if it should design a product in-house or outsource the design. Because this new product will not require the company to add resources, management is only interested in the annual contribution margin expected to be earned. The details of each option are as follows:

1. In-house
   • Plan to sell 186510 units per year
   • Each unit will sell for $14
   • The probability that the design will result in a variable cost of $8 for each unit is 0.4
   • If the company cannot reach its low cost target, the cost is estimated to be $10 for each unit
2. Outsource
   • Plan to sell 186510 units per year
   • Each unit will sell for $14
   • The probability that the design will result in a variable cost of $6 for each unit is 0.5
   • If the company cannot reach its low cost target, the cost is estimated to be $11 for each unit

To the nearest whole dollar, what is the expected profit if the company decides to design the item externally?

Your Answer: