Assignment 2

Production Planning & Control BMM4823
Assignment 1
Due date: 18th March 2016
1. Group Case study Yankee Fork and Hoe Company (as given in the class on 7/3/16)
Individual Assignment 2-7
2. Always One Sdn. Bhd. is a manufacturer of cars battery would like to expand their
production line for the production of June. However, the expansion is subjected to the
demand capacity whether it will be increased or decreased in June. Table Q1 shows the
previous demand for last 5 months. As an expert in this field, you were asked to help Always
One to solve few question as highlighted below;
Table Q1 Sales for Jan - May
Month
Jan
Feb
Mar
Apr
May
Jun
Sales (1000 units)

120
140
160
190
200
?
a) Determine the forecasting sales for the year of 2016 by using exponential smoothing with
an
=0.3 and initial forecast for Jan is 110000 units.
b) Determine the forecasting sales for the year of 2014-2016 by using 3 years moving
average.
c) Compare and give comments on forecasting errors by using Mean Squared Error (MSE).
d) Do you think the company should expand the plant for the production of year 2016? Your
answer should be justified.
e) Suggest which forecasting method is suitable for determination of forecasting model in
Table Q1.
3. The manager of materials store in company Always One is having difficulties maintaining
materials stocks at the right level. Sometimes he runs out of materials, sometimes he is
overstocked. He admits that the decision as to what to order and in what quantities is left to
the store supervisor who adopts a policy of ordering when he thinks stock are getting low and
guesses as to what quantities to order.
a) Present the arguments for a forecasting policy.
b) Material X is a high cost item used for a product with a demand which can fluctuate quite
widely, material Y is low cost item used with a number of products and for which the
demand is quite stable, material Z is a medium cost item for which the demand changes,
but not usually at a rapid rate. Advocate forecasting methods for each of material.
4. The demand for prawn crackers is fluctuating from month of January to October. The
company wants to monitor the demand for this product closely as it nears the end of life
cycle. The following table shows the actual sales history for January to October. Generate
forecasts for November and December using trend projection by least square method.

Looking at the accuracy of its forecast over the history file, as well as the other statistics
provided, how confident are you in these forecast for November and December?
Month
January
February
March
April
May
June
Sales
890000
800000
825000
840000
730000
780000
Month
July
August
September
October
November
December
Sales
710000
730000
680000
670000
?
?
5. The manager of YTL power in Terengganu wants to develop quarterly forecast power loads
for the next year. The power loads are seasonal and the data on the quarterly loads in
Megawatts (MW) for the last 4 years are as follows;
Quarter
1
2
3
4
2012
103.5
126.1
144.5
166.1
2013
94.7
116.0
137.1
152.5
2014
118.6
141.2
159.0
178.2
2015
109.3
131.6
149.5
169.0
2016
The manager estimates the total demand for 2016 at 450 MW. Determine the forecast power
will be consumed for each quarter.
6. At a hydrocarbon processing factory, process control involves periodic analysis of samples for
a certain process quality parameter. The analytic procedure currently used is costly and time
consuming. A faster and more economical alternatives procedure has been proposed.
However, the numbers for the quality parameter given by the alternative procedure are
somewhat different from those given by the current procedure, switching to the new
procedure would be reasonable and cost effective. The following data were obtained for the
quality parameter by analysing samples using both procedures.
Current
Proposed
Current
Proposed
3.0
3.1
3.1
3.1
3.1
3.9
2.7
2.9
3.0
3.4
3.3
3.6
3.6
4.0
3.2
4.1
3.8
3.6
a) Use linear regression to find a relation to forecast Y which is the quality parameter from
the current procedure, using the values from the proposed procedure X.
b) Is there a strong relationship between Y and X? Justify your answer.
7. Always One Sdn. Bhd. manufacturer apply exponential smoothing to forecast the demand for
electricity control equipment. The demand shows an increasing trend from month to month.
Use the provided data to forecast for October 2015. The company decided smoothing
constant for = 0.2 and = 0.5. Assume the initial forecast for month April (F April) was 11
units and the trend over that period (TApril) was 2 units.

Month
April
May
June
July
August
September
October
Demand
12
17
20
19
24
21
?

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What are the steps to forecast sales for Always One Sdn. Bhd. using exponential smoothing?

What factors should be considered when choosing a forecasting method for different materials?

Production Planning & Control BMM4823

Due date: 18th March 2016

Sales (1000 units)

=0.3 and initial forecast for Jan is 110000 units.

Production Planning & Control BMM4823

Production Planning & Control BMM4823

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