1. Scenario: The owner of a large bicycle sales and repair business stocks a popular brand of mountain bikes. Based on historical data, the estimated annual demand for the bikes is 1375 units. The estimated average demand per day is 11 units. The purchase cost from the distributor is $765.00 per unit. The lead-time for a new order is 7 days. The ordering cost is $72.50 per order. The average holding cost per unit per year is $32.51. The business has traditionally ordered 48 units each time they placed an order. Based upon using the businesses current ordering model:

   The owner of a bicycle repair and sales business has hired you to help him make his business more profitable. The following table shows sales data for one product for each month for the year (assume 30 days/month). These data will be referenced in order to answer questions 1 - 18.

   Month	Sales	Forecast
   Month 1	92	91
   Month 2	78
   Month 3	66
   Month 4	74
   Month 5	70
   Month 6	84
   Month 7	84
   Month 8	76
   Month 9	75
   Month 10	63
   Month 11	85
   Month 12	84
   Month 13

   Question 1: Use a 4-month moving average to calculate the sales forecast for months 5, 10 & 13.

   77.25, 79.25 & 77.00

   77.50, 79.75 & 76.75

   78.75, 81.00 & 78.25

   81.50, 81.00 & 75.50

4 points

Question 2

1. Question 2:Refer to the data in the Question 1 and use exponential smoothing at an alpha of 0.30 to calculate each months forecast. What are the forecasts for Months 4, 10 & 12?

   83.92, 80.08 & 76.14

   80.92, 77.74 & 76.82

   80.71, 77.16 & 76.84

   81.97, 79.28 & 79.38

4 points

Question 3

1. Question 3: Refer to the data in the Question 1 and calculate the seasonal index for Months 3 and 6.

   0.85 & 1.08

   0.85 & 1.09

   0.87 & 1.03

   0.83 & 1.06

4 points

Question 4

1. Question 4: Refer to the data in the Question 1 and use the forecast generated by the exponential smoothing method to calculate the MAD for the data.

   9.29

   8.85

   8.19

   7.37

4 points

Question 5

1. Question 5: Refer to the data in the Question 1 and calculate the Weighted Average Forecast for Months 5 - 13 where the most recent month carries a weight of 4, the next most recent month a weight of 3, the next a weight of 2 and finally the oldest month carries a weight of 1. The weights are arranged from the most recent month to the oldest month: 4, 3, 2, & 1. What are the forecasts for months 6, 9 & 13?

   71.2, 79.4 & 79.2

   73.7, 81.9 & 81.0

   75.3, 80.5 & 77.0

   70.3, 78.4 & 79.5

4 points

Question 6

1. Question 6:Refer to the data in the Question 1.What is the average number of units in inventory based upon ordering 48 units each time an order is placed?

   31.0

   32.0

   27.5

   24.0

3 points

Question 7

1. Question 7:Refer to the data in the Question 1.How many orders per year will be necessary based upon ordering 48 units each time an order is placed? Round your answer to two decimals.

   20.70

   22.73

   28.65

   20.81

3 points

Question 8

1. Refer to the data in the Scenario 1 for Question 1.What is the average dollar value of inventory based upon ordering 48 units each time an order is placed? (Rounded to the nearest dollar)

   $18,360

   $22,165

   $18,838

   $22,720

3 points

Question 9

1. Question 9:Refer to the data in the Question 1.What is the total annual cost (Purchase Cost + Ordering Cost + Holding Cost) based upon ordering 48 units each time an order is placed? (Rounded to the nearest dollar)

   $858,689

   $924,547

   $1,054,732

   $943,100

3 points

Question 10

1. Question 10:Refer to the data in the Question 1.What is the optimal reorder point based upon ordering 48 units each time an order is placed?

   54

   56

   66

   77