Spring 2017

1. Valles Global Industries has a division that operates a fishing fleet that fishes for Alaskan cod. In the table entitled “Cod Catch” in the attached file, you will find the history of the fleet’s catches over 24 months. Develop a forecasting model for the fleet that illustrates the forecast for 24 months plus month 25. Use a smoothing factor (alpha) of .1. Show how you calculated each forecast and the forecast error. Discuss the smoothing factor—will changing this factor improve your forecast? How?2. The Sohn Aerospace Division of Sohnco has a demand forecast for the first three months of next year is
January 600 ships
February 100 ships
March 900 ships

Strangely, they have 100 ships in stock as of December 31.

a) Plot cumulative demand and a level aggregate production plan with no back orders and no ending inventory.
b) What production is needed each month to meet part a’s conditions?
c) Suppose any left-over ships at the end of each month cost $500,000 per month in storage and interest costs. Assume the start-up inventory is not part of the calculation. Should we make any changes to our plan? Explain your answer.
3. Sohn Aerospace is looking at another product line. Their new drone helicopter is popular and they would like to sell what they can with no backorders. The CEO does not wish to hire and fire people during the year so he wants you hire a constant number of employees and maintain that size workforce. Review the attached file for the table of data and then answer the following questions:

1. What daily production rate and number of employees will be necessary?
2. How many units will be in inventory at the end of each quarter?

4. Mullen Magic Shows is evaluating attendance at the shows and planning whether to train more magicians. They have the following data:

Year Total Audience

2013 97130
2014 101326
2015 96956
2016 99816
2017 99694
2018 103762
2019 104958
2020 110988
2021 112157
2022 110370

a. Plot these data, develop a hypothesis of an appropriate model, estimate the model’s parameters, and forecast passengers for 2023-2025.
b. Illustrate an exponential smoothing model using an alpha of .1 and then an alpha of .5.
c. In doing some analysis, they assume each show has about 500 attendees. Each magician they hire can work up to 50 shows a year and is paid $1500 per show up to 50 shows. Recently, magicians complained that they are under contract for 50 shows but only paid for shows they work. If each magician is paid $500 per show she/he does not work, what does this policy cost per year?

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