- a) Estimate the demands for Quarters I, II, III, and IV in Year 6 using a 3-quarter
moving average method.
- b) Estimate the demand for Quarters I, II, III, and IV in Year 6 using the static
method.
- c) Evaluate the MAD, MAPE and TS (i.e., the KPIs) in each case and compare
them in the format as shown below.
- d) Based on the findings from (b), which of the two methods do you prefer? Why, using answers from (c)?
Task Done in Word
- e) Caltex also sells toilet paper (in 20-roll pack), among other things. The average
demand is 1,500 packs each month The petrol station incurs a fixed order
placement, transportation, and receiving cost of $200 each time an order is placed
with the supplier. It also incurs a holding cost of 10 per cent of the unit cost of the
product. The normal wholesale price is $8 per pack. Recently, the supplier offered
all-unit quantity discount to Caltex to promote sales. The price schedule is as
follows:
1) What is the economic order quantity (EOQ) of 20-roll toilet paper packs per lot
for Caltex if there is no volume discount?
2) What is the total annual cost for Caltex assuming there is no volume discount
from the supplier and the price per pack is $8?
3) What is the optimal order quantity if Caltex decides to take the volume
discount? You need to show the calculations of EOQs and total costs at all the
three prices.
4) What is the new total annual cost for Caltex upon taking the volume discount?
5) What is the annual saving for Caltex upon taking the quantity discount in
comparison with the normal situation when there is no volume discount?
- f) Conduct your own research and find out what the sanitary paper product
manufacturing industry usually does in forecasting demand. You may wish to
analyse and discuss based on product value, product volume, and product flow
as different product characteristics may require different methods to forecast the
demand accurately. Give examples and use up-to-date references to support
your arguments.