Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 37

In Problem in Chapter, the Saki motorcycle dealer in Minneapolis-St. Paul orders the Saki Super TXII motorcycle it sells from the manufacturer in Japan. Using the 3-month moving average forecast of demand for January as the monthly forecast for the next year, an annual carrying cost of $375, an ordering cost of $3,200, and a lead time for receiving an order of 1 month, determine the optimal order size, the minimum total annual inventory cost, the optimal time between orders, the number of orders, and the reorder point.
Problem
The Saki motorcycle dealer in the Minneapolis-St. Paul area wants to make an accurate forecast of demand for the Saki Super TXII motorcycle during the next month. Because the manufacturer is in Japan, it is difficult to send motorcycles back or reorder if the proper number is not ordered a month ahead. From sales records, the dealer has accumulated the following data for the past year:
a. Compute a 3-month moving average forecast of demand for April through January (of the next year).
b. Compute a 5-month moving average forecast for June through January.
c. Compare the two forecasts computed in (a) and (b), using MAD. Which one should the dealer use for January of the next year