OPERATIONS MANAGEMENT B3401

ASSIGNMENT # 1 (Total 100 points)

Due on Oct. 06 at 5:00pm
(Write your name, student #, section # in which you are registered)

Q1. (Total 25 points)

Joanna is currently working a total of 8 hours per day to produce 280 dolls. She thinks
that by changing the paint used for the facial features and fingernails, she can increase the
rate to 350 dolls per day. Total material cost for each doll is approximately $3.50; she has
to spend $40 in the necessary supplies (expendables) per day; energy costs are assumed
to be only $4.00 per day; and the labor rate for her is $10 per hour.
a) Viewing this from a multifactor productivity perspective by taking all the given inputs
into consideration, what are her productivity at present and the one with the new paint in
terms of dolls per dollar, respectively? (15 points)
b) If she uses the new paint, by what amount could Joanna’s material costs per doll
increase without reducing the present multifactor productivity? (10 points)
Q2. (Total 50 points)
Suppose you (or your group) are the manager of a company trying to determine what
forecasting method to use. Based upon the following historical data, calculate the
following forecasts for each given forecasting method and then choose the best one to do
the forecasts for the future.
Actual
Month Demand

1 61
2 65
3 67
4 70
5 72
6 73

a. Calculate the simple 3-month moving average forecast for periods 4-6. (5 points)
b. Calculate the weighted 3-month moving average using weights of 0.50, 0.30, and
0.20 for periods 4-6. (5 points)
c. Calculate the exponential smoothing forecast for periods 2-6 using an initial forecast
(F1) 61, and an  of 0.30. (10 points)
d. Calculate the double exponential smoothing forecast for periods 2-6 using an initial
trend forecast (T1) of 1.8, and initial exponential smoothing forecast (S 1) of 60 an 
of 0.30 and a  of 0.30. (15 points)
e. Calculate the Mean Absolute Deviation (MAD) for the forecasts made by each
technique in periods 4-6. Which forecasting method do you prefer? Using your
preferred technique forecast the demands for the following 2 months (months 7-8).
(15 points)
Q3. (Total 25 points)
Goodyear Tire and Rubber Company is the ninth largest tire manufacturer in the world.
Here are the sales revenues for the past five years:

Year Revenue (millions)

1 $4,887.9
2 5,065.4
3 5,535.6
4 5,730.8
5 5,499.7

a. When might a manager prefer linear trend technique to simple moving average
technique? Explain your answer. (5 points)

b. Based on MAD over years 3, 4 and 5, which method (linear-trend or double

exponential smoothing method with  = 0.4 and  = 0.2 (start with initial estimates S 1 =
$4,867.90 and T1 = $201.5 for the year 1)) provides the better forecasts? Explain.
Forecast the sales revenues for years 6 and 7 based on the better method (20 points)