Posted: November 12th, 2015

# Case Study Altavox

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?

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