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Amanta Appliances sells two styles of refrigerators at more than 50 locations in the Midwest. The first style is a rela- tively expensive model, whereas
Amanta Appliances sells two styles of refrigerators at more than 50 locations in the Midwest. The first style is a rela- tively expensive model, whereas the second is a standard, less expensive model. Although weekly demand for these two products is fairly stable from week to week, there is enough variation to concern management at Amanta. There have been relatively unsophisticated attempts to forecast weekly demand, but they haven't been very suc- cessful. Sometimes demand (and the corresponding sales) are lower than forecast, so that inventory costs are high. Other times the forecasts are too low. When this happens and on-hand inventory is not sufficient to meet customer demand, Amanta requires expedited shipments to keep cus- tomers happyand this nearly wipes out Amanta's profit margin on the expedited units.5 Profits at Amanta would almost certainly increase if demand could be forecast more accurately. Data on weekly sales of both products appear in the file C12_02.xlsx. A time series chart of the two sales variables indicates what Amanta management expectednamely, there is no evidence of any upward or downward trends or of any seasonality. In fact, it might appear that each series is an unpredictable sequence of random ups and downs
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