Compare moving average forecast with trend projection forecast. Which method is better? Why?Explain

Topic: Business Decision Analysis

Paper details:

HomeMart’s is considering producing and selling a new product for asphalt repair.

The fixed cost for setting up the production floor is estimated to be $320,000. Variable production and material cost are estimated to be $8per unit of the product.

HomeMartestimates the total demand for the products to be 25000 units.

HomeMartplans to sell the product to hardware stores for $32per unit.

a)What is the breakeven point?

b)What profit or loss can be anticipated with a revised demand of 10000 units?

c)With the demand of 10000 units, what is the minimum price per unitthat HomeMartmustcharge to break even?

d)If HomeMartbelieves that the price per unit could be increased to $45 and not affect the anticipated demand of10000 units, whatprofit or loss can be anticipated?

QUESTION 2

The sale of HomeMart’sasphalt repair product for the past 10 months is as shown below. If Home Martuses 3-month moving average to forecast sales: Month 1 23 4 5 6 7 8 9 1 0

Sales 450452453451458457461463462465

a)What are the forecasts for months 4-11?b)What is the resulting MAE, MSE and MAPE values?

QUESTION 3

a)Using the data given in Question 2, forecast the sales ofHomeMart’s asphalt repair product for the month 11 using linear trend projection forecastusing the least squares method.

b)What is the resulting MAE, MSE and MAPE values?

c)Compare moving average forecast with trend projection forecast. Which method is better? Why?

Consider the following linear programming problem:

Max 10A + 12Bs.t 6A + 12B <= 2410A + 5B <= 25

a)Find the optimal solution using the graphical solution procedure.

b)If the objective function is changed to 10A + 4B,what is the optimal solution?

QUESTION 5

Consider the following linear programMax 12A + 9Bs.t 5A + 15B <= 2510A + 6B <= 26

a)Use Excel solver the find the optimal solutionand generate the sensitivity report.

What is the optimal solution?

Use the Sensitivity report to answer the following questions:

b)Assume that the objective function coefficient for A changes from 12to 16. Does the optimal solution change? Why?

c)Assume that the objective function coefficient for A remains 12, but the objective function coefficient for Bchanges from9to 12. Does the optimal solution change?Why?

d)Based on the shadow price and the right-hand-side range information in Sensitivity report, what conclusion can you draw about the effect of changes to the right-hacgond side of the constraint 1?

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