3. (25pts). The Instant Paper Clip Office Supply Company sells and delivers offi

Question

3. (25pts). The Instant Paper Clip Office Supply Company sells and delivers office supplies to companies, schools, and agencies within a 50-mile radius of its warehouse. The office supply business is competitive, and the ability to deliver orders promptly is a big factor in getting new customers and maintaining old ones. (Offices typically order not when they run low on supplies, but when they completely run out. As a result, they need their orders immediately.) The manager of the company wants to be certain that enough drivers and vehicles are available to deliver orders promptly and that they have adequate inventory in stock. Therefore, the manager wants to be able to forecast the demand for deliveries during the next month. From the records of previous orders, management has accumulated the following data for the past 10 months: Month Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct Orders 120 90 100 75 110 50 75 130 110 90 a. Compute the monthly demand forecasts for April through November using a 3-month moving average. (Spts)

Explanation / Answer

Below is the table to calculate the 3-month moving average forecast for Apr to Nov.

Month Order 3 Months moving average Jan 120 Feb 90 Mar 100 Apr 75 (120+90+100)/3 = 103.33 May 110 (90+100+75)/3 = 88.33 Jun 50 (100+75+110)/3 = 95 Jul 75 (75+110+50)/3 = 78.33 Aug 130 (110+50+75)/3 = 78.33 Sep 110 (50+75+130)/3 = 85 Oct 90 (75+130+110)/3 = 105 Nov (130+110+90)/3 = 110

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