Strategic profit model gives us a nice visual way to analyze how management decisions will automatically
impact firms performance as measured by the return on assets, for example.
Aggregate Inventory Analysis:
Inventory turns are widely used measures of i

Consider product X. The monthly demand is approximately 310 units. Each unit costs $35 and the
annual holding cost is approximately 30 percent of unit value. It costs approximately $145 to
place an order, regardless of size and the current order quantity

Qualitative
Methods
Quantitative
Methods
Causal
Models
Time
Series
Models
Other Models
Combination Methods
Time Series Methods:
Patterns of Demand
Objective: Isolate patterns in past data
Level: Average magnitude of demand data
Trend: Long-run general

Google Trends
http:/www.google.com/trends/explore#q=%22excel%202010%22&date=8%2F2009%2077m&cmpt=q&tz=
Last Period
Simple
2 weeks moving
Demand
Average
average
Note: the chart on the web-site is monthly, the data download is weekly
ME
MSE
MAD
Worldwide
Wee

Forecasts
Week 1
Week 2
5
6
Current inventory
Item
A
On hand
12
Bill of Materials
Week 3
4
B
7
Week 4
8
C
22
Week 5
3
D
2
Week 6
3
Week 7
4
Week 8
7
Week 9
6
Level 0
Level 1
Level 2
A
B
C
D
Week
Demand
Scheduled receipts
On hand
Order release
Demand
Sched

Questions
1
Calculate the optimal inventory control parameters Q and R for the data given in the next worskheet.
2
For the scenario calculated in Q.1, what is the total annual inventory holding cost?
3
Now imagine that a new forecasting software allows yo