1. Three production processes, A, B, and C have the following cost structure:

Process Fixed Cost Variable Cost

Per Unit Per Year

A $120000 $3.0

B $90000 $4.0

C $80000 $4.5

(1) What is the most economical process for a volume of 8000 units?

(2) How many units per year must be sold with each process to have annual

profits of $50000 if the selling price is $6.95 per unit?

(3) What is the break-even volume for each process?

2. Community General Hospital finds itself treating many bicycle accident victims. Data from the last seven 24-hour periods is shown below:

Day Bicycle Victims

1 6

2 8

3 4

4 7

5 9

6 9

7 7

(1) What are the forecasts for days 4 through 8 using a 3-period moving

average model? Round the forecasts to two decimal places.

(2) With an alpha value of 0.4 and a starting forecast in day 3 equal to the

actual data, what are the exponentially smoothed forecasts for days 4 through 8?

Round the forecasts to two decimal places.

3.Sales (in thousands) of the new Thorton Model 506 convection oven over

the eight-week period since its introduction have been as follows:

Week Sales

1 18.6

2 21.4

3 25.2

4 22.4

5 24.6

6 19.2

7 21.7

8 23.8

(1) Which exponential smoothing model provides better forecasts, one using

= 0.6 or = 0.2? Compare them using mean squared error.

(2) Using the two forecast models in part (1), what are the forecasts for

week 9 ?