NATIONAL INSTITUTE OF TECHNOLOGY CALICUT, KERALA

Department of Mechanical Engineering

Subject Code & Name: ME3105 Production Management
Class: S5 Production Engineering
Module-II, Assignment-I
1. An analyst must decide between two different forecasting techniques for weekly sales of
bicycles: a linear trend equation and the naive approach. The linear trend equation is y
i
=
12+2x
i
, and it was developed using data from periods 1 through 10. Based on the data
from periods 11 through 20, calculate the MPE and MAPE. Based on the values of MPE
and MAPE, comment on which of the two methods has the greater overall accuracy.
Compare the two methods in terms of the forecast bias.

T 11 12 13 14 15 16 17 18 19 20
Units Sold 25 28 34 40 44 39 48 50 47 54

2. Given these data on predicted and actual demand for 10 periods:

Period 1 2 3 4 5 6 7 8 9 10
Demand 145 144 146 158 151 148 155 142 152 144
Predicted 142 145 146 146 150 150 149 151 147 150

a) Determine the forecast error for each period.
b) Compute a tracking signal beginning in period 5.
c) Based on the preceding analyses, what can you conclude about how well the forecast
is performing?
3. A computer software firm has experienced the following demand for its Personal
Finance software package.

Period 1 2 3 4 5 6 7 8
Units 56 61 55 70 66 65 72 75

Develop an exponential smoothing forecast using = 0.40, and an adjusted exponential
smoothing forecast using = 0.40, and = 0.20. Compare the accuracy of the two
forecasting using MAD and cumulative error.
4. A local building products store has accumulated sales data for two-by-four lumber (in
board feet) and the number of building permits in its area for the past 10 quarters.
Develop a linear regression model for these data and determine the strength of the linear
relationship using correlation. If the model appears to be relatively strong, determine the
forecast for lumber given 10 building permits in the next quarter.

Quarter 1 2 3 4 5 6 7 8 9 10
Building Permits, x 8 12 7 9 15 6 5 8 10 12
Lumber Sales (1,000s of
bd ft), y
12.6 16.3 9.3 11.5 18.1 7.6 6.2 14.2 15.0 17.8

5. Demand for patient surgery at Washington general hospital has increased steadily in the
past few years, as seen in the following table.

Year 1 2 3 4 5 6
Outpatient surgeries performed 45 50 52 56 58 ---

The director of medical services predicted six years ago that demand in year 1 would be
42 surgeries. Using exponential smoothing with a weight of = 0.20, develop forecasts
for years 2 through 6. What is the MAD?
6. Assume an initial starting F
t
of 100 units, a trend of 10 units, = 0.20, and = 0.30. If
actual demand turned out to be 115 rather than the forecast 100, calculate the forecast for
the next period.
7. Consider the product structure of a manufacturing firm, as shown in Fig. 1. The company
is interested in performing an MRP exercise for the next eight weeks to cover the
requirements indicated in the MPS. The MPS requirements for the next eight weeks are
20,80,100,200,100,0,120 and 150.









Fig. 1
The relevant information on lead time, inventory status and lot sizing are available in
Table 1. Develop the MRP schedule for the final product as well as for all the
components and answer the following questions:
a) Do we need to schedule order releases for component B? If so, when and how much?
b) How long will the on-hand inventory of item D satisfy the requirement?
c) How many orders need to be placed for component F?
A
B(2) D(3) C(2)
E(2) F(2) G(2) E(2)
d) If the cost of scheduling an order is INR 2,000 what is the total cost of ordering for
the MRP plan?
Table 1
Item Lead time (Weeks) Inventory status Lot sizing rule
A 1 100 Lot for lot
B 2 200 Lot for lot
C 1 400 2 periods
D 2 1000 3 periods
E 2 2000 2 periods
F 2 1200 500
G 1 2000 1000

8. Fig. 2 shows the product structure for a manufacturing firm. In addition to the final
product (Product A), component B is sold as a spare in the market. The MPS for Product
A and component B and other relevant information for the problem are given in Table 2
and Table 3.
Table 2 MPS for the next six periods
Period 1 2 3 4 5 6
Product A 100 80 220 140 70 160
Component B 40 30 70 -- 60 50










Fig. 2 Product structure
Perform the MRP exercise to cover the requirements of the MPS and answer the
following questions:
a) What is the gross requirement for component B during the six periods?
b) How many orders do we have to place for component C and in what quantities?
c) Suppose the lead time for component G is two weeks instead of one week, what will
its impact be on the planning process?
d) Suppose that the economic order quantity for component C is 320 units. What will the
appropriate POQ lot sizing rule be for component C?

A
B(2) C(3) D(4)
D(2) E(2) G(2) F(2)
Table 2
Item Lead time (Weeks) Inventory status Lot sizing rule
A 2 200 Lot for lot
B 2 900 Lot for lot
C 1 750 Lot for lot
D 2 2500 2 periods
E 1 300 3 periods
F 2 1000 500
G 1 600 1000

9. Table 3 shows the MRP for component C
Component C Lot size: LFL
BOM Quantity: 1 Lead time: 1
0 1 2 3 4 5 6
Gross requirements 100 250 160 0 200 70
On-hand inventory 400 300 50 0 0 0 0
Net requirement 0 110 0 200 70
Planned receipts 0 110 0 200 70
Planned order releases 110 0 200 70 0

Of late, the organization has been experiencing frequent shortages of this component. It
has been estimated that on an average, the company loses INR 5,000 by way of lost
business and goodwill due to these shortages in a six week period. Therefore, it has been
decided to include a safety stock of 100 units. Rework the planning details for this
component by incorporating the safety stock requirement.

10. In problem 9, assume that the organization decided to implement a safety lead time of
one week instead of safety stock.
a) Rework the planning details for this component by incorporating the safety lead time
requirement.
b) Compare the two results and list two significant observations that you have made.



Submission date: 07-10-2014