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Chapter 4: Q3DQ (page 475)

From the choice of a simple moving average, weighted moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why?

Short Answer

Expert verified

Answer

The weighted moving average is considered the most accurate forecasting technique as it is used to overcome the strong effect of extreme values.

Step by step solution

01

Weighted moving average

The weighted moving average is atechnical indicator that traders use to generate trade direction and make a buy or sell decision.

02

Weighted moving average is the most accurate forecasting technique than the simple moving average, exponential smoothing, and linear regression analysis

Out of the four choices (simple moving average, weighted moving average, exponential smoothing, and regression analysis), the weighted moving average is the most accurate technique of forecasting because specific weights will be placed by their importance. The other methods make assumptions, like an average, straight line, or exponential curve. The weighted average could also be modified to any form.

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Most popular questions from this chapter

Question: Let鈥檚 say you work for a company that makes prepared breakfast cereals like corn flakes. Your company is planning to introduce a new hot breakfast product made from whole grains that would require some minimal preparation by the consumer. This would be a completely new product for the company. How would you propose forecasting initial demand for this product?

What are the advantages and disadvantages of aggregating demand from a forecasting view? Are there other things that should be considered when going from multiple DC鈥檚 to one DC?

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

Item cost
\(10.00
The standard deviation of weekly demand
25 per week
Order cost
\)250.00
Lead time
1 week
Annual holding cost (%)
\(33% of the item cost
Service probability
95%
Annual demand
25,750

Average demand
515 per week

a. State the order quantity and reorder point.

b. Determine the annual holding and order costs.

c. If a price break of \)50 per order was offered for purchase quantities of over 2,000, would you take advantage of it? How much would you save annually?

Semans is a manufacturer that produces bracket assemblies. Demand for bracket assemblies (X) is 130 units. The following is the BOM in indented form:

ITEMS

DESCRIPTION

USAGE

X

Bracket assembly

1

A

Wall board

4

B

Hanger sub-assembly

2

D

Hanger casting

3

E

Ceramic knob

1

C

Rivet Head screw

3

F

Metal tong

4

G

Plastic cap

2

Below is a table indicating current inventory levels:

ITEMS

X

A

B

C

D

E

F

G

Inventory

25

16

60

20

180

160

1000

100

a.Using Excel, create the MRP using the information provided.

Demand for stereo headphones and MP3 players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for last year was as follows:

Month

Demand (units)

January

4200

February

4300

March

4000

April

4400

May

5000

June

4700

July

5300

August

4900

September

5400

October

5700

November

6300

December

6000

b. To be reasonably confident of meeting demand, Nina decides to use three standard errors of estimate for safety. How many additional units should be held to meet this level of confidence?
See all solutions

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