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QUESTION

Case number 2 In order to help draw reasonable boundaries on the case, please prepare your answers primarily on the case contents and the text and

Each question is worth 10 points indicated.

Q1. (10 points) Using a simple moving average of the last three months, what is the forecast for October sales in units?

Q2. (5 points) The sales price per unit is $125. What is the forecast for October sales in $ terms?

During the briefing you earn accolades for your quality work on short notice (an ‘attaboy’ or ‘attagirl’ as appropriate). However, the CEO says that he doesn’t feel that all three months should count equally. He thinks that the most recent month should be 60 percent; the previous month would be about 30 percent; and the other month the balance. “Get back to me with a brief memo with the revised sales forecast in units and dollar terms, ok?” Of course, the “ok” is rhetorical.

Answer Q3 and Q4 in a brief memo to the CEO.

Q3. (10 points) What is the revised sales forecast in unit terms?

Q4. (5 points) What is the revised forecast in dollar terms?

Fast-forward to the end of October 2015. The actual sales were 695.

In a short memo to the CEO answer the following:

Q5. (5 points) What was the difference between the October sales forecast and the October actual sales?

Q6. (5 points) Why might there have been a difference? (Hint: stick to the facts. Don’t assume too many unusual scenarios. For example, it is highly unlikely that Martians invaded the earth in this time period.)

Q7. (10 points) What is the November sales forecast in units using a four month simple moving average?

Q8. (5 points) What is the November sales forecast in dollar terms using the simple moving average? What major assumption do you need to make this forecast?

Q9. (10 points) What is the November sales forecast in unit terms using a weighted average of the most recent month = 35%; then 30%; then 20%; and fourth month is the balance?

Q10. (5 points) What is the November sales forecast in dollar terms using the weighted average?

Part 3

(20 points each topic – ABC and sales)

In a memo to the CEO (two pages max), as a logistician outline the pro’s and con’s of managing inventory using an ABC methodology; and also the usefulness of forecasting sales.

Include how these might also help the overall operations of the entire organization.

And be sure to include an overall assessment of each (i.e., ABC and forecast).

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