Vida Dampo is the purchasing clerk for Adanfopa Company. Adanfopa sells car filters. One of the most popular filters is the BMW, which has an annual demand of 4,000 units. The cost of each filter is $90, and the inventory carrying cost is estimated to be 10% of the cost of each filter. Vida has made a study of the costs involved in placing an order for any of the filters that Adanfopa Company stocks, and she has concluded that the average ordering cost is $25 per order. Furthermore, it takes about two weeks for an order to arrive from the supplier, and during this time the demand per week for Adanfopa Company is approximately 80.
i. What is the EOQ? 2marks
ii. What is the ROP? 2marks
iii. What is the average inventory? What is the annual holding cost? 2marks
iv. How many orders per year would be placed? 1mark
3
v. What is the annual ordering cost? 1mark
b)
EV
Develop an adjusted exponential forecast for a firm with the demand for bread as shown in the table below. 10marks
Week 1 2 3 4 5 6 7 8
Demand 700 685 648 717 713 728 754 762
Let = 0.1 and = 0.2. Previous average of Ft1= 650, and let the initial trend adjustment, Tt1 = 0
c) CR Management of Daviss Department Store has used time-series extrapolation to forecast retail sales for the next four quarters. The sales estimates are $100,000, $120,000, $140,000, and $160,000 for the respective quarters before adjusting for seasonality. Seasonal indices for the four quarters have been found to be 1.30, 0.90, 0.70, and 1.10, respectively. Compute a seasonalized or adjusted sales forecast. 4marks
