Quiz 5

Prodman
Name________________________________ Date________________

1. The Instant Paper Office Supply Company sells and delivers office supplies within a 50 km
radius of the warehouse. The industry is very competitive so they want to forecast demand
so as to be ahead of the competition.

MONTH SALES
January 37
February 40
March 41
April 37
May 45
June 50
July 43
August 47
September 56
October 52
November 55
December 54

Forecast January sales using each of the following: ( 5 points each)

a. A 6 month weighted moving average using the ff weights
July= 0.10
August= 0.1
September= 0.1
October= 0.2
November= 0.2
December- 0.3

b. Exponential smoothing using α= 0.30 and a October forecast of 60

c. trend line analysis

2. Ross Whites machine shop uses 2000 brackets during the course of a year and usage is
relatively constant throughout the year. These brackets are purchased from a suppliers for $15
each and the lead time is 2 days. The holding cost per bracket per year is $1.50 ( or 10% of the
unit cost) and the ordering cost per order is $18.75. There 250 working days per year.
a. What is the EOQ? ( 3 points)
b. What is the ROP? ( 2 points)
If the supplier offers a discounted price of $12 if White orders in 1000 lots, should they take the
discount? ( 5 points)
 3. Vultex Fibres produces a product line of sweat clothes that exhibit a varying demand
pattern. Given the following demand forecasts, production costs and constraints, design a
production plan for Vultex using transportation model. Also, calculate the cost of the
production plan.

PERIOD DEMAND
September 100
October 130
November 200
December 300

Maximum regular production 100 units/month

Maximum overtime production 50 units per month
Maximum subcontracting 50 units /month
Regular production costs $10/hr
Overtime production costs $25/hr
Subcontracting costs $35/unit
Inventory costs $5/ unit
Beginning inventory 0

Production 1 2 3 4 Unused Capac

period capacity ity
Regular
1
Overtime

Subcontract

2 Regular

Overtime

Subcontract

3 Regular

Overtime

Subcontract

Regular
4
Overtime

Subcontract

DEMAND