- The following times series shows the demand for a particular product over the past 10 months.
- Useα = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for month 11.
- Compare the three-month moving average forecast with the exponential smoothing forecast usingα = 0.2. Which appears to provide the better forecast based on MSE?
- Consider the following quarterly time series.
|Quarter||Year 1||Year 2||Year 3|
- Construct a time series plot. What type of pattern exists in the data?
- Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise.
- Compute the quarterly forecasts for next year based on the model developed in part (b).
- Salemach Corporation is a start-up company that manufactures simple machines. It is interested in analyzing the profit from a new machine. It estimates that the selling price will be $150 per unit and the setup and advertising costs will total $250,000. The company estimates that the per unit raw material cost is uniformly distributed between $50 and $80 and are equally likely. The demand is normally distributed with a mean of 12,000 units and a standard deviation of 3,000 units. The probability distribution for a range of labor cost per unit is given below.
- Obtain estimates for the mean profit, maximum profit, minimum profit, and standard deviation of profit.
- What is your estimate of the probability of a loss?
- Jase Hansen is interested in leasing a sports-utility vehicle and has contacted three automobile dealers for pricing information. Each dealer offered Jase a 24-month lease with no down payment due at the time of signing. Each lease includes a monthly cost, mileage allowances, and the cost for additional miles. The details are given in the below table.
|Dealer||Monthly Cost ($)||Mileage Allowances||Cost per|
Additional Mile ($)
Jase decided to choose the lease option that will minimize his total 24-month cost. He is not sure how many miles he will drive in the next two years. Hence, for the purpose of decision, assume that Jase wants to evaluate options of driving 20,000 miles per year, 23,000 miles per year, and 25,000 miles per year.
- Construct a decision tree based on the payoff table constructed in the previous problem.
- Recommend a decision based on the use of optimistic, conservative, and minimax regret approaches?
- a) What is the most important idea that you learned this semester in our class that directly relates to the course material? This could be a methodology you think you’ll use often, or something related to software (excel), decision-making, etc.
- b) With the constraints of working online, what would you have liked to have spent more time on? Less time on?
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