# View the step-by-step solution to: Case study for Altavox 4 question. 1. Consider using simple

Case study for Altavox 4 question.
1. Consider using simple moving average model. Experiment with models using five weeks' and three weeks' past data. The past data in each region is given in the tab "Moving Average Analysis," that also includes the 13 week data (table above) along with the past 5 weeks'. Evaluate the forecasts that would have been made over the past 13 weeks (week 1 to week 13) using the "mean absolute deviation" and "tracking signal " as criteria.
2. Next, consider using a simple exponential smoothing model. In your analysis, test two alpha values 0.2 and 0.4. Use the same criteria for evaluating the model as in part 1. Assume that the initial previous forecast for the model using an alpha value of 0.2 is the past three-week average. For the model using an alpha value of 0.4, assume that the previous forecast is the past five-week average.

Altavox is considering a new option for distributing the model VC 202 where, instead of using five vendors, only a single vendor would be used. Evaluate this option by analyzing how accurate the forecast would be based on the DEMAND AGGREGATED ACROSS ALL REGIONS. Use the model that you think is best from your analysis of questions 1 and 2. Use a new criterian that is calculated by taking the MAD and dividing by the average demand. This criterian is called the mean absolute percent error (MAPE) and gauges the error of a forecast as a percent of the average demand.

. 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 distributors to a single distributor.

CASE : ALTAVOX ELECTRONICS
Altavox is a manufacturer and distributor of many different electronic instruments and devices, including digital/analog multimeters,function generators, oscilloscopes, frequency counters, and other test and measuring equipment. Altavox sells a line of test meters that are popular with professional electricians. The model VC202 (see picture) is sold through SIX distributors to retail stores in the United states. These distributors are located in Atlanta, Boston, Chicago, Dallas, and Los Angeles and have been selected to serve different regions in the country. The model VC2o2 has been a steady seller over the years due to its reliability and rugged construction. Altovax does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 13 weeks is shown in the tab labeled &quot;Demand Data.&quot; Management would like you to experiment with some basic forecasting models to determine what should be used in a new system being implemented. The new system is programmed to use one of two models: simple moving average or exponential smoothing. The analysis questions are continued in the &quot;Demand Data&quot; Altavox Demand Data
Week
Atlanta
Boston
Chicago
Dallas
LA
Total 1
33
26
44
27
32
162 2
45
35
34
42
43
199 3
37
41
22
35
54
189 4
38
40
55
40
40
213 5
55
46
48
51
46
246 6
30
48
72
64
74
288 7
18
55
62
70
40
245 8
58
18
28
65
35
204 9
47
62
27
55
45
236 10
37
44
95
43
38
257 11
23
30
35
38
48
174 12
55
45
45
47
56
248 QUESTIONS (4)
Consider using simple moving average model. Experiment with models using five weeks' and three weeks' past data. The past data in each region is given in the tab &quot;Moving Average Analysis,&quot; that also includes the 13 week data (table above) along with the past 5 weeks'. Evaluate the forecasts that would have been made over the past 13 weeks (week 1 to week 13) using the &quot;mean absolute deviation&quot; and &quot;tracking signal &quot; as criteria. 1. Next, consider using a simple exponential smoothing model. In your analysis, test two alpha values 0.2 and 0.4. Use the same criteria for evaluating the model as in part 1. Assume that the initial previous forecast for the model using an alpha value of 0.2 is the past three­week average. For the model using an alpha value of 0.4, assume that the previous forecast is the past five­week average. 2. Altavox is considering a new option for distributing the model VC 202 where, instead of using five vendors, only a single vendor would be used. Evaluate this option by analyzing how accurate the forecast would be based on the DEMAND AGGREGATED ACROSS ALL REGIONS. Use the model that you think is best from your analysis of questions 1 and 2. Use a new criterian that is calculated by taking the MAD and dividing by the average demand. This criterian is called the mean absolute percent error (MAPE) and gauges the error of a forecast as a percent of the average demand. 3. 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 distributors to a single distributor. 4. 13 Average
40
40
50
42
47
47
42
48
50
46
229
222 Altavox Moving Average Analysis
Week
Atlanta
Boston
Chicago
Dallas
LA
Total -5
45
62
62
42
43
254 -4
38
18
22
35
40
153 -3
30
48
72
40
54
244 -2
58
40
44
64
46
252 -1
37
35
48
43
35
198 1
33
26
44
27
32
162 2
45
35
34
42
43
199 3
37
41
22
35
54
189 4
38
40
55
40
40
213 5
55
46
48
51
46
246 6
30
48
72
64
74
288 7
18
55
62
70
40
245 8
58
18
28
65
35
204 9
47
62
27
55
45
236 10
37
44
95
43
38
257 11
23
30
35
38
48
174 12
55
45
45
47
56
248 13
40
50
47
42
50
229

SOLUTION:
WEEK DEMAND 1
2
3
4
5
6
7
8
9
10
11
12
13
Average Demand 162
199
189
213
246
288
245
204
236
257
174
248
229
222 WEEK DEMAND 3
4
5
6
7
8
9
10
11
12
13 189
213
246
288
245
204
236
257
174...

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