The work needs to be done in an Excel® file
Principles of Supply Chain Management
Problem Set 1
1. Based on the information shown below, develop forecasts for April to October using:
(a) A 3-period weighted moving average model (w1 = 0.5, w2 = 0.3, and w3 = 0.2).
(b) An exponential smoothing model with α = 0.35. Assume the forecast for March was 950.
Month Actual Demand
Jan 1050
Feb 975
Mar 1000
Apr 870
May 970
Jun 1220
Jul 1170
Aug 1150
Sep 1235
Oct 1275
2. Based on the information shown below, calculate MAD, MSE and tracking signal.
Week Actual Demand Forecast
1 750 770
2 690 730
3 820 710
4 850 790
5 870 840
6 780 850
7 915 890
8 950 920
3. For the information given, rank the customers in terms of customer lifetime value.
Avg. Annual Sales Avg. Profit Margin Expected Lifetime
Customer 1: $3,450 17 % 8 years
Customer 2: $2,000 13 % 6 years
Customer 3: $1,400 32 % 10 years
Use a discount rate of 6 percent and treat the average sales figures as annuities. Should any of these customers be fired?
