Free Essay

Risk

In: Business and Management

Submitted By lhamke
Words 449
Pages 2
Global Operations Management
Laura Hamke
MGMT415-1201A-06
American InterContinental University
27 January 2012

Abstract
This exercise is the development of a spreadsheet that depicts the calculations of 3- and 5-period moving average. The data for two weeks is given and the calculation for each is presented. Specific analyses are presented given the data.

Period Moving Average 1. Calculated forecast for 3- and 5- period moving average. Day | Demand | 3-Period | 5-Period | 1 | 200 | 164 | 167 | 2 | 134 | 152 | 152 | 3 | 157 | 166 | 154 | 4 | 165 | 156 | 153 | 5 | 177 | 149 | 156 | 6 | 125 | 140 | 160 | 7 | 146 | 159 | 162 | 8 | 150 | 176 | 166 | 9 | 182 | 172 | 167 | 10 | 197 | 165 | 164 | 11 | 136 | 152 | 156 | 12 | 163 | 163 | 163 | 13 | 157 | 163 | 163 | 14 | 169 | 169 | 169 | | | | |

| | | | | | 2. Graphs of the Collective data, Demand data, 3-Period, and 5-Period

The 3-period moving average shows a steady sale of geraniums with the exception of a peak in sales around the third, eighth and ninth days of the 14 day cycle. The 3-period moving average seems to anticipate the peak selling period, but is almost the same time as the valley of the selling period. The 5-period moving average shows a sporadic selling pattern. There are multiple peaks and valleys. This forecast would be difficult to use, as there is no consistent pattern. The Demand graph shows a peak in sales at the first, fifth, and ninth days, but each of the 3- and 5- period averages indicates a steady demand. Basically, if a steady supply of geraniums is maintained throughout the fourteen days, ABC Floral Shop should be able to meet the demand without waste and overstocking of the plant. This should cut down on the death of plants that are not sold due to overstocking. 3. Which forecast is best? Why?
The 3-period is the best because it gives more accurate data in realtime. As stated previously, because it is more in line with the actual activity of the floral shop. In helps the proprietor to anticipate the time when sales will be high and planning is more efficient.
If ABC Floral Shop is forecasting for long-term I would use the 5-period moving average, as it would allow for cost savings in the long run and give a truer picture of the peaks and valleys.

References
Heizer, J. & Render, B. (2012). Operations management. Upper Saddle River: Prentice Hall iPredict. (n.d.). Moving averages andtimew-seriesforecasting. Retrieved from http://www.ipredict.it/UseOfMAInForecasting.aspx. iPredict. (n.d.). Moving averages. Retrieved from http://www.ipredict.it/Methods/MovingAverage.aspx. iPredict. (n.d.). Time series forecasting. http://www.ipredict.it/TimeSeriesForecasting.aspx.…...

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