EEMT5120

Extra Exercises for Midterm Review

Spring 2024

Forecasting

1. You have been given the most recent 20 quarters (t) of data on the sales (x) of brand A
phones as the following table. You decide to use the multiplicative Holt-Winter method
to forecast future sales. Your initial estimates of alpha, beta, and gamma are 0.2, 0.3, and
0.2. However, you lose some data by coincidence.

Year
Quarter 1 2 3 4 5
1 151 165 240
2 228 223 336 383 471
3 269
4 433
!"
a) Luckily, you have processed the data and recorded that ∑!" !
#$%(t)=210, %#$%(t )=2870,
!"
∑!" !" !
#$%(x& )=8060, ∑#$%(x& 𝑡)=101315, %#$%(x& ) = 4261270. Assume 𝑥 = 𝑆" +𝐺" 𝑡, what
is your estimate of 𝑆" and 𝐺" ?

b) Assume that your calculated average seasonal values are as follows: 𝑇4[%] = 0.6489, 𝑇4[!] =
0.8816, 𝑇4[)] = 0.9180, 𝑇4[*] = 1.5997, Calculate forecast for quarters 1-3 (i.e. 𝐹",% , 𝐹%,! ,
𝐹!,) ).

Solution:

(a)

20 ∗ ∑!" !" !"

#$%(x& 𝑡) − ∑#$%(t) ∑#$%(x) 20 ∗ 101315 − 210 ∗ 8060
𝐺" = !" !" =
20 ∗ ∑#$%(t ) − (∑#$%(𝑡))
! ! 20 ∗ 2870 − 210!
333700
= = 25.0902
13300
8060 210
𝑆" = 𝑥̅ − 𝐺" 𝑡̅ = − 25.0902 ∗ = 139.5529
20 20
(b)

4
𝐶𝐹 = = 0.9881
0.6489 + 0.8816 + 0.9180 + 1.5997
𝑐-) = 𝑇4[%] 𝐶𝐹 = 0.6489 ∗ 0.9888 = 0.6412

𝑐-! = 𝑇4[!] 𝐶𝐹 = 0.8816 ∗ 0.9888 = 0.8711

𝑐-% = 𝑇4[)] 𝐶𝐹 = 0.9180 ∗ 0.9888 = 0.9071

𝑐" = 𝑇4[*] 𝐶𝐹 = 1.5997 ∗ 0.9888 = 1.5807

𝐹",% = (𝑆" + 𝐺" )𝑐-) = 105.5647

𝐴%
𝑆% = 𝛼 C E + (1 − 𝛼)(𝑆" + 𝐺" ) = 178.8154
𝑐-)

𝐺% = 𝛽(𝑆% − 𝑆" ) + (1 − 𝛽)𝐺" = 29.3420

𝐴%
𝑐% = 𝛾 C E + (1 − 𝛾)𝑐-) = 0.6818
𝑆%

𝐹%,! = (𝑆% + 𝐺% )𝑐-! = 181.3266

𝐴!
𝑆! = 𝛼 C E + (1 − 𝛼)(𝑆% + 𝐺% ) = 218.8733
𝑐-!

𝐺! = 𝛽(𝑆! − 𝑆% ) + (1 − 𝛽)𝐺% = 32.5568

𝐴!
𝑐! = 𝛾 C E + (1 − 𝛾)𝑐-! = 0.9052
𝑆!

𝐹!,) = (𝑆! + 𝐺! )𝑐-% = 228.0646

Project Management

1. An airport construction project consists of nine activities. The network and data given in
the following table show the planning of a project (the time is in weeks).
Activity Immediate Normal Time Crash Time Crashing Cost per week
Predecessor
A - 2 1 $700
B A 3 1 $800
C A 2 1 $200
D B 5 3 $400
E B, C 2 1 $200
F C 2 1 $300
G D 2 1 $500
H E, F 4 2 $100
I G, H 3 2 $650

a) Please draw an AOA diagram, finish the forward and backward pass analysis, and
determine the critical path.
b) If you need to shorten the project duration by 3 weeks, what is the cheapest way to shorten
the project? What is the total Crashing Cost for that?

Solution:
(1) Critical path: A-B-D-G-I
(2)
Path Week N1 N2 N3
A-B-D-G-I 15* 14* 13* 12*
A-B-d1-E-H-I 14 14* 13* 12*
A-C-d2-E-H-I 13 13 12 11
A-C-F-H-I 13 13 12 11

Step 1:
A-B-D-G-I length: 15
A-B-d1-E-H-I length: 14
A-C-d2-E-H-I length: 13
A-C-F-H-I length: 13

{A,B,D,G,I}, D is cheapest, Crash D by 1 week, Cost $400.

Step 2:
A-B-D-G-I length: 14
A-B-d1-E-H-I length: 14
A-C-d2-E-H-I length: 13
A-C-F-H-I length: 13

{A,B,D,G,I} & {A,B,E,H,I}, D+H is cheapest, Crash D+H by 1 week (note that D cannot be
further crashed), Cost $400 + $100=$500. .

Step 3:
A-B-D-G-I length: 13
A-B-d1-E-H-I length: 13
A-C-d2-E-H-I length: 12
A-C-F-H-I length: 12
{A,B.D.G.I} & {A.B.E.H.I}, G+H is cheapest, Crash G+H by 1 week, Cost $500 +
$100=$600

Total crashing cost: $400 + $500 + $600 = $1500.

2. The following network shows PERT time estimates (optimal, most likely, pessimistic) in
weeks.

a) Determine a critical path based on most likely times. What is the mean and standard
deviation of the length of the critical path?
b) Assuming that the critical path is the one identified in a), find the probability that the
project will be completed within 33 weeks.
c) Assuming that the critical path is the one identified in a), how many weeks are required
to complete the project with probability 0.96?

Solution:
(a) All paths and their lengths from node 1 to node 7 are:
A-C-E-G: 6+4+7+3 = 20 (1 point)
A-B-E-G: 6+7+7+3 = 23 (1 point)
A-B-D-G: 6+7+7+3 =23 (1 point)
A-B-F-H: 6+7+8+8 = 29 (1 point)
Then, the critical path is A-B-F-H

Critical activity Mean Variance

A (3 + 4 ´ 6 + 7) 6 = 5.67 (7 - 3)2 36 = 0.44
B (1 + 4 ´ 7 + 9) 6 = 6.33 (9 - 1)2 36 = 1.78
F (8 + 4 ´ 8 + 8) 6 = 8 (8 - 8)2 36 = 0
H (5 + 4 ´ 8 + 13) 6 = 8.3 (13 - 5)2 36 = 1.78

Mean: 28.3
Standard deviation: 2
33 - 28.3 ö
(b) P(T £ 33) = Pæç z £ ÷ = P(z £ 2.35 ) = 0.9906
è 2 ø
(c) z=1.75
T = 28.3 + 1.75 ´ 2 = 31.8 weeks