Question 1

Sales of Orange computer have grown steadily during the past 5 years:

Year	Sales
1	450
2	295
3	518
4	563
5	584
6	?

The sales manager had predicted, before the business started, that year 1’s sales would be 410 computers.

Required:

1. Using exponential smoothing with a weight of alpha = 0.30, develop forecasts for years 2 through 6. (2 marks)
2. Using smoothing constants of 0.6 and 0.9, develop forecasts for the sales of Orange computers. (2 marks)
3. Based on your answer in part (b), propose the most accurate forecast in smoothing constant. (2 marks)
4. Critically evaluate the effect that the smoothing constant have on the forecast for Orange computers. (4 marks)

Question 2

Selina conducted a survey on customer satisfaction based on the following proposed hypotheses:

H1: the better the food quality, the greater the customers’ satisfaction.

H2: the better the restaurant’s ambience, the greater the customers’ satisfaction.

H3: the better the service quality, the greater the customers’ satisfaction.

After running the raw data, she derived the following statistical report from the statistical software and it is illustrated as below:

SUMMARY OUTPUT

Regression Statistics
Multiple R	0.99794806
R Square	0.99512648
Adjusted R Square	0.99513164
Standard Error	1.64839211
Observations	20

ANOVA

	df	SS	MS	F	Significance F
Regression	Missing	10561.07486	Missing	1295.585	2.66E-19
Residual	16	43.47514498	2.717197
Total	19	10604.55

	Coefficients	Standard Error	t Stat	P-Value
Intercept	0.562	1.327	0.424	0.677
Food quality	0.959	0.038	25.245	0.000
Restaurant’s ambience	1.117	0.125	8.916	0.000
Service quality	1.460	0.066	22.185	0.000

Dependent variable: Customers’ satisfaction

Required:

1. Based on the table above, critically evaluate outcomes of these variables. Justify your answer based on the shown statistical result. (6 marks)
2. Based on your answer from part (a), assess the predictors has the greatest impact on customers’ satisfaction. Justify your answer based on the shown statistical result. (4 marks)

Question 3

After six months of study, much political arm wrestling, and some serious financial analysis, Dr Martin Starr, president of Southwestern University, had reached a decision. To the delight of its students and to the disappointment of its athletic boosters, SWU would not be relocating to a new football site but would expand the capacity at its on-campus stadium.

Adding 21,000 seats, including dozens of luxury skyboxes, would not please everyone. The influential football coach, Billy Bob Taylor, had long argued the need for a first-class stadium, one with built-in dormitory rooms for his players and a palatial office appropriate for the coach of a future NCAA champion team. But the decision was made, and everyone, including the coach, would learn to live with it.

The job now was to get construction going immediately after the current season ended. This would allow exactly 270 days until the upcoming season opening game. The contractor, Hill Construction (Bob Hill being an alumnus, of course), signed the contract. Bob Hill looked at the tasks his engineers had outlined and looked President Starr in the eye. “I guarantee the team will be able to take the field on schedule next year,” he said with a sense of confidence. “I sure hope so,” replied Starr. “The contract penalty of $10,000 per day for running late is nothing compared to what Coach Billy Bob Taylor will do to you if our opening game with Penn State is delayed or cancelled.” Hill, sweating slightly, did not respond. In football-crazy Texas, Hill Construction’s name would be mud if the 270-day target were missed.

Back in his office, Hill again reviewed the data. (refer to the table below, and note that optimistic time estimates can be used as crash times.) He then gathered his foremen. “People, if we’re not 75% sure we’ll finish this stadium in less than 270 days, I want this project crashed! Give me the cost figures for a target date of 250 days—also for 240 days. I want to be early, not just on time!”

			Time (Days)
Activity	Description	Immediate predecessors	Optimistic	Most likely	Pessimistic	Crash cost/day (RM)
A	Bonding, insurance, tax structuring	-	20	30	40	1,500
B	Foundation, concrete footings for boxes	A	20	65	80	3,500
C	Upgrading skyboxes, stadium seating	A	60	60	100	4,000
D	Upgrading walkways, stairwells, elevators	C	30	50	100	1,900
E	Interior wiring, lathes	B	25	30	35	9,500
F	Inspection approvals	E	1	1	1	0
G	Plumbing	D, E	25	30	35	2,500
H	Painting	G	10	20	30	2,000
I	Hardware/air conditioning/metal workings	H	20	25	60	2,000
J	Tile/carpeting/windows	H	8	10	12	6,000
K	Inspection	J	1	1	1	0
L	Final detail work/clean-up	I, K	20	25	60	4,500

Required:

1. Develop a network drawing for Hill Construction, and determine the critical path(s). Assess the length of the project expected to take. (2 marks)
2. Calculate the probability of finishing in 270 days. (1 mark)
3. If it were necessary to crash to 250 or 240 days, analyse whether Hill would do it so and calculate costs that it is willing to bear in this project. As noted in the case, assume that optimistic time estimates can be used as crash times. (7 marks)