The next forecast previous forecast the alpha value

Info icon This preview shows pages 3–5. Sign up to view the full content.

The next forecast = previous forecast + the alpha value ( ). is calculated as the percentage of the forecast error. Forecast error = actual demand from the previous period less previous forecast. Therefore, the exponential demand for the period follows the following method. The forecast week 6 = 600 units. Alpha 0.1 Forecast week 7 is given by the forecast week 6 plus [the alpha x (the actual week 6 – forecast week 6)]. =600 + [0.1 x (596 - 600)] = 600 + [0.1 x (-4)] = 600 + 0.4 = 599.60. Question 2 Aggregate demand planning strategies Period Aggregate demand 1 630 2 520 3 410 4 270 5 410 6 520 Form the given data, the rate of production per employees will be presented as 500/50 = 50 units per period. The per unit production cost will be 2400/50 which gives 48SR per units.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

QUESTION-ANSWERS 4 Therefore, in the case of the chase strategy, the total production per period is equivalent to the demand during that period. Consequently, the ending inventory is calculated as the production during in that particular period plus the beginning stock less the demand in that period. Similarly, the total cost will be given by the totals of the firing cost, inventory carrying cost, production costs, and hiring cost. Aggregate demand planning using the chase strategy Period 1 2 3 4 5 6 Total Forecast 630 520 410 270 410 520 2,760 Output Regular 350 500 450 250 400 550 2500 Inventory - Beginning inventory 300 20 - 40 20 10 - Ending inventory 20 - 40 20 10 40 - Workers Hired - 3 - - 3 3 - Workers Fired 3 - 1 4 - - - Employee 10 7 10 9 5 8 - Backorder - - - - - - - Costs Regular 16,800 24,000 21,600 12,000 19,200 26,400 120,000 Hiring - 15,000 - - 15,000 15,000 45,000 Firing 15,000 - 5,000 20,000 - - 40,000 Inventory holding 2,000 - 4,000 2000 4,000 4,000 13,000 Backorder - - - - - - - TOTAL COSTS 33,800 39,000 30,600 34,000 45,400 45,400 218,000 Conversely, in the level strategy, the assumption we make for the production level is 460 units per very period. The total cost of level strategy is given by 242600 SR.
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern