Posted: November 12th, 2015

Case Study Altavox

30 The number of cases of merlot wine sold by the Connor Owen winery in an eight-

year period

is as follows:

YEAR CASES OF MERLITT WINE YEAR CASES OF MERLOT WINE

2002

2003

2004

2005

270

356

398

456

2006

2007

2008

2009

358

500

410

376

Using an exponential smoothing model with an alpha value of 0.20, estimate the

smoothed

value calculated as of the end of 2009. Use the average demand for 2002 through

2004 as your

initial forecast, then smooth the forecast forward to 2009.

CASE ALTAVOX ELECTRONICS

Altavox is a manufacturer and distributor of many different electronic

instruments and devices, including digital/analog multimeters,

function generators, oscilloscopes, frequency counters, and

other test and measuring equipment. Altavox sells a line of test

meters that are popular with professional electricians. The model

VC202 is sold through five distributors to retail stores in the United

States. These distributors are located in Atlanta, Boston, Chicago,

Dallas, and Los Angeles and have been selected to serve different

regions in the country.

The model VC202 has been a steady seller over the years due

to its reliability and rugged construction. Altavox does not consider

WEEK 2 3 4 6

Atlanta 33 45 37 38 55 30

Boston 26 35 41 40 46 48

Chicago 44 34 22 55 48 72

Dallas 27 42 35 40 51 64

LA 32 43 54 40 46 74

Total 162 199 189 213 246 288

QUESTIONS

Excel:

Altavox Data

Consider using a simple moving average

model. Experiment with models using five

weeks’ and three weeks’ past data. The past

data in each region is given below (week – I

is the week before week I in the table, -2

is two weeks before week I, etc.). Evaluate

the forecasts that would have been made

over the 13 weeks for each distributor using

the mean absolute deviation, mean absolute

percent error, and tracking signal as criteria.

WEEK -5 -4 -3 -2 -l

Atlanta 45 38 30 58 37

Boston 62 18 48 40 35

Chicago 62 22 72 44 48

Dallas 42 35 40 64 43

LA 43 40 54 46 35

Total 254 153 244 252 198

7

18

55

62

70

40

245

this a seasonal product, but there is some variability in demand.

Demand for the product over the past 13 weeks is shown in the

following table.

These data are contained in an Excel spreadsheet Altavox Data.

The demand in the regions varies between a high of 40 units on

average per week in Atlanta and 48 units in Dallas. This quarter’s

data are pretty close to the demand last quarter.

Management would like you to experiment with some forecasting

models to determine what should be used in a new system being

implemented. The new system is programmed to use one of two

models: simple moving average or exponential smoothing.

9 10 ll 12 13 AVERAGE

58 47 37 23 55 40 40

18 62 44 30 45 50 42

28 27 95 35 45 47 47

65 55 43 38 47 42 48

35 45 38 48 56 50 46

204 236 257 174 248 229 222

2 Next, consider using a simple exponential smoothing model.

In your analysis, test two alpha values, .2 and .4. Use the

same criteria for evaluating the model as in question I.

Assume that the initial previous forecast for the model using

an alpha value of .2 is the past three-week average. For the

model using an alpha of .4, assume that the previous forecast

is the past five-week average.

3 Altavox is considering a new option for distributing the

model VC202 where, instead of using five distributors, only

a single distributor would be used. Evaluate this option by

analyzing how accurate the forecast would be based on the

demand aggregated across all regions. Use the model that

you think is best from your analysis of questions I and 2.

What are the advantages and disadvantages of aggregating

demand from a forecasting view? Are there other things that

should be considered when going from multiple distributors

to a single distributor?

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A GOOD DISCOUNT ðŸ™‚

Place an order in 3 easy steps. Takes less than 5 mins.