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Measures the average square of the error. The error is the amount by which the estimate differs from the quantity to be estimated.
So looking at what we have done we have that the model with less MSE is the Winter model with values 0,010822507 so it has more accurate forecast.
The MAD; In our assignment the model with less MAD is the winter model with values 0,255404724 or 0,094942726, that’s mean that the model with less MAD is more accurate forecast.
The MAPE is generally not affected by the magnitude of the demand values, because is expressed as a percentage. But it is not appropriate for very low demand values.
To calculate the MAPE you must take the sum of the ratios between forecast error and actual demand times 100 (to get the percentage) and divide by N.
Focusing on the errors we can say that the winter model is the one with less error so because of that reason we choose the winters model.
2.1) Formulate the single item dynamic lot sizing problem for the Hyundai automobile company using the given data.
Number of order policies X = 5 (i.e. x = 0, 1, 2, 3 and 4) Planning horizon Y = 12 months Carrying cost CC = $ 0.15 per unit per month Additional storage cost CO = $ 5 per unit per month Storage capacity SC = 100 units Stock out cost M = $.75 per item per month Based on the demand of the item at each and every time period, the optimal lot size is to selected at each time period in order to minimize the total cost for the entire planning horizon. Determining optimal lot size is a core concern in this DLSP. The mathematical model for this DLSP is stated under the following Assumptions: • Inventory system for a single item is planned over the planning horizon Y. • Demand of the item Dy for time periods y is known exactly from the net requirements for the entire planning period Y. • Purchase cost Pxy is dependent on lot size Lxy which corresponds to order policy x and period y. The purchase cost Pxy includes discount price structure, the fixed cost of ordering and delivery and cost of Lxy units. • Stock Sy at the end of period y is dependent on lot size Lxy selected at period y, stock Sy−1 at the end of period y−1 and the demand of the item Dy at the time period y. • Carrying cost per unit per unit time CC is constant and the cost of holding excess stock is dependent on the number of units in stock Sy at the end of period y and the holding cost for the period y is denoted as CCy . • Storage capacity is restricted to certain number of units SC. If the stock Sy at the end of any period y exceeds the limit of SC, then an additional storage requirement is arranged at the cost of CO per unit per period and overstock cost at any period y is addressed as SCy. • Cost of shortage per unit per unit time M represents the penalty for shortfall in any period and shortage cost for the period y is represented as SHy. The value of M is assumed with a …show more content…
Spreadsheet question 3
3) Consider a Class A item. Describe briefly an appropriate inventory model design for this item.
Class A items (like Spring Valley in our case) are defined to be the most important products in a whole company. That is, the total costs replenishment, carrying stock, and shortages associated with such an item are high enough to justify a more sophisticated and rigorous control system.
The potentially high payoff warrants frequent managerial attention to the replenishment decisions of individual items. However, decision rules, based on mathematical models, do have a place in aiding manager. The art of management is very evident in this type of activity.
Below that, it’s exposed the particular characteristics to design an A class item inventory:
1. Inventory records should be maintained on a transactions recording basis, particulary for the more expensive items. 2. Top management should be kept informed, using frequent reports to senior management for careful review. 3. Demand and supply should be estimated and influenced, providing manual input to forecasts, ascertining the predictability of demand or manipulating a given demand
So looking at what we have done we have that the model with less MSE is the Winter model with values 0,010822507 so it has more accurate forecast.
The MAD; In our assignment the model with less MAD is the winter model with values 0,255404724 or 0,094942726, that’s mean that the model with less MAD is more accurate forecast.
The MAPE is generally not affected by the magnitude of the demand values, because is expressed as a percentage. But it is not appropriate for very low demand values.
To calculate the MAPE you must take the sum of the ratios between forecast error and actual demand times 100 (to get the percentage) and divide by N.
Focusing on the errors we can say that the winter model is the one with less error so because of that reason we choose the winters model.
2.1) Formulate the single item dynamic lot sizing problem for the Hyundai automobile company using the given data.
Number of order policies X = 5 (i.e. x = 0, 1, 2, 3 and 4) Planning horizon Y = 12 months Carrying cost CC = $ 0.15 per unit per month Additional storage cost CO = $ 5 per unit per month Storage capacity SC = 100 units Stock out cost M = $.75 per item per month Based on the demand of the item at each and every time period, the optimal lot size is to selected at each time period in order to minimize the total cost for the entire planning horizon. Determining optimal lot size is a core concern in this DLSP. The mathematical model for this DLSP is stated under the following Assumptions: • Inventory system for a single item is planned over the planning horizon Y. • Demand of the item Dy for time periods y is known exactly from the net requirements for the entire planning period Y. • Purchase cost Pxy is dependent on lot size Lxy which corresponds to order policy x and period y. The purchase cost Pxy includes discount price structure, the fixed cost of ordering and delivery and cost of Lxy units. • Stock Sy at the end of period y is dependent on lot size Lxy selected at period y, stock Sy−1 at the end of period y−1 and the demand of the item Dy at the time period y. • Carrying cost per unit per unit time CC is constant and the cost of holding excess stock is dependent on the number of units in stock Sy at the end of period y and the holding cost for the period y is denoted as CCy . • Storage capacity is restricted to certain number of units SC. If the stock Sy at the end of any period y exceeds the limit of SC, then an additional storage requirement is arranged at the cost of CO per unit per period and overstock cost at any period y is addressed as SCy. • Cost of shortage per unit per unit time M represents the penalty for shortfall in any period and shortage cost for the period y is represented as SHy. The value of M is assumed with a …show more content…
Spreadsheet question 3
3) Consider a Class A item. Describe briefly an appropriate inventory model design for this item.
Class A items (like Spring Valley in our case) are defined to be the most important products in a whole company. That is, the total costs replenishment, carrying stock, and shortages associated with such an item are high enough to justify a more sophisticated and rigorous control system.
The potentially high payoff warrants frequent managerial attention to the replenishment decisions of individual items. However, decision rules, based on mathematical models, do have a place in aiding manager. The art of management is very evident in this type of activity.
Below that, it’s exposed the particular characteristics to design an A class item inventory:
1. Inventory records should be maintained on a transactions recording basis, particulary for the more expensive items. 2. Top management should be kept informed, using frequent reports to senior management for careful review. 3. Demand and supply should be estimated and influenced, providing manual input to forecasts, ascertining the predictability of demand or manipulating a given demand