Sample Questions of MSC301
Forecasting:
1. Royal Mail experiences a seasonal pattern of its daily mail volume every week. The following
data for three representative weeks are expressed in hundreds of pieces of mail:
DAY Week 1 Week 2 Week 3 Week 4
Sunday 5 10 8 ?
Monday 20 20 18 ?
Tuesday 30 32 40 ?
Wednesday 35 40 45 ?
Thursday 45 50 52 ?
Friday 70 75 75 ?
Saturday 15 20 25 ?
Total ?
Requirement: Using the data of last three weeks forecast the daily demand of week 4.
2. KFC experiences seasonal pattern of its daily Chicken Burger sales volume every week. The
following data of seven days for two representative weeks are expressed in hundreds of pieces of
burger sales:
DAY Week 1 Week 2 Week 3
Saturday 5 6 ?
Sunday 10 12 ?
Monday 32 36 ?
Tuesday 12 10 ?
Wednesday 8 10 ?
Thursday 20 22 ?
Friday 70 75 ?
Requirement:
Using the data of last two weeks, forecast the daily demand of week 3
3. Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of
bottled water. Actual demand and the two sets of forecasts are as follows:
PREDICTED DEMAND
Period Demand F1 F2
1 68 9 66
2 75 10 68
3 70 11 70
4 74 12 72
5 69 13 74
6 72 14 76
7 80 15 78
8 78 16 80
a. Compute MAD for each set of forecasts. Given your results, which forecast appears to be
the most accurate? Explain.
b. Compute the MSE for each set of forecasts. Given your results, which forecast appears to
be the most accurate?
c. In practice, either MAD or MSE would be employed to compute forecast errors. What
factors might lead a manager to choose one rather than the other?
d. Compute MAPE for each data set. Which forecast appears to be more accurate?
4. Two independent methods of forecasting based on judgment and experience have been
prepared each month for the past 10 months. The forecasts and actual sales are as follows:
Months Sales Forecast 1 Forecast 2
1 770 771 769
2 789 785 787
3 794 790 792
4 780 784 798
5 768 770 798
6 772 768 770
7 760 761 759
8 775 771 775
9 786 784 788
10 790 788 788
a. Compute the MSE and MAD for each forecast. Does either method seem
superior? Explain.
b. Compute MAPE for each forecast.
c. Prepare a naive forecast for periods 2 through 11 using the given sales data.
Compute each of the following; (1) MSE, (2) MAD, (3) tracking signal at
month 10, and (4) 2s control limits. How do the naive results compare with
the other two forecasts?
5. National Scan, Inc. sells radio frequency inventory tags. Monthly sale for a seven-month
period were as follows:
Month Sales (000 units)
Feb. 19
Mar. 18
Apr. 15
May 20
Jun. 18
Jul. 22
Aug. 20
a. Plot the monthly data on a sheet of graph paper.
b. Forecast September sales volume using each of the following:
I. A linear trend equation
II. A five-month moving average
III. Exponential smoothing with a smoothing constant equal to .20, assuming a march
forecast of 19(000).
IV. The nave approach
V. A weighted average using .60 for August .30 for July, and .10 for June.
c. Which method seems least appropriate? Why? (Hint: Refer to your plot from part a.)
d. What does use of the term sales rather than demand presume?
6. An electrical contractors records during the last five weeks indicate the number of job
requests:
Week: 1 2 3 4 5
Requests: 20 22 18 21 22
Predict the number of requests for week 6 using each of these methods:
a. Naive
b. A four-period moving average.
c. Exponential smoothing with = .30. Use 20 for week 2 forecast.
Inventory Management:
1. Starwood Hotel and Resort operates 52 weeks per year, 7 days per week. It purchases kitty
litter for $11.70 per bag. The following information is available:
Demand=90 bags/weeks
Order cost= $54/order
Unit holding cost=27 percent of cost
Lead time= 3 weeks
Current on-hand inventory is 320 bags, with 120 schedule receipt but no back order.
Requirement:
a. Considering the information provided determine the EOQ.
b. When should a new order be placed?
c. Determine Annual Inventory cost considering EOQ as lot size.
2. Transcom Electronics, a manufacturer of consumer electronic goods, has five distribution
centers (DCs) in different regions of the country. For one of its products, Air conditioner priced
at $350 per unit, the average weekly demand at each DC is 75 units. Average shipment size to
each DC is 400 units and average lead time for delivery is two weeks. Each DC carries two
weeks supply as safety stock but holds no anticipation inventory.
Requirements:
a. How much total inventory (cycle, safety and pipeline) does Transcom hold for all five DCs?
3. A produce distributor uses 800 packing crates a month, which it purchased at a cost of $10
each. The manager has assigned an annual carrying cost of 35% of the purchase price per crate.
Ordering costs are $28. Currently the manager orders once in a month. How much could the firm
save annually in ordering and carrying cost by using the EOQ?
MPS and MRP:
1. The forecast in each week for the first four weeks are 70, 75, 80 and 70 units respectively and
for the rest of the periods are 75 units per week. The MPS rule is to schedule production if the
projected on-hand inventory would be negative without it. Customer orders (committed) are as
follows:
Week Customer Orders
1 52
2 35
3 20
4 12
Use a production lot size of 100 units and 10 units as beginning inventory
Requirement:
Prepare a Master Production Schedule (MPS) of an eight week period from the information
given below.
2. Eighty units of end item E are needed at the beginning of week 3 and Ninety Units at the end
of week 6. Three cases (30 units per case) of J have been ordered and one case is scheduled to
arrive in week 3, one in week 4 and one in week 5. Note that J must be ordered by the case and B
must be produced in multiples of 120 units. There are 60 units of B and 20 units of J now on
hand. Lead times are two weeks for each E and B and one for J.
E
B
(
2
)
a. Prepare a material requirement plan for component B and J.
b. Calculate average inventory in both the cases.
3. Product A is made from one unit of B and two units of C. Item B is assembled from two units
of D and one unit of E. Item C is fabricated from one unit of D. Lead time for items B and D is 2
weeks each, whereas it is one week each for items C and E. Item B and C follow POQ and item
E follows L4L lot sizing rule. Purchased item D must be ordered in lots of 300 because of
transportation costs. Items D and C has scheduled receipt of 300 and 45 units respectively. On-
hand inventory is 50 for B, 100 for C, 40 for E and 130 for D. There is a requirement of safety
stock of 10% for item D.
Requirements:
a. Draw the bill of materials for item A.
b. The MPS calls for order of 45 units to be finished in weeks 3, 6 and 7. The assembly
lead time for A is one week. Develop a material requirements plan for next 8 weeks for
items B, C and D.
c. Calculate average on-hand inventory of each of this items.
4. The monthly requirements of component A are: 100 units in month 2, 300 units in month 4,
350 units in month 6, 200 units in month 7, 250 units in month 9 and 180 units in month 11.
There is a schedule receipt of 250 units in month 1 and beginning (on-hand) inventory of 80
units that has been carried forward from last year.
Table 2: Detail of different methods of resource planning
Data category Details
Lot Sizing Rule Periodic Order Lot for Lot Fixed order
Quantity (P=3) Quantity=250
units/Lot
Lead time 2 month 1 month 2 month
Requirement:
a. Develop a Material Requirement Plan (MRP) of component A for twelve month period.
b. Calculate Average on-hand inventory using three different methods.
c. Comment on the application part of different methods under different situations. Highlight
some of the advantages and disadvantages of these resource planning method
Transportation Model:
