# Inventory & Forecasting Questions

Explain how to use seasonal index values to create a forecast.

In the solution of the assignment problem, the opportunity lost is the difference between the

a. smallest value in the column and the value in the cell.

b. largest value in the row and the value in the cell.

c. smallest value in the row and the value in the cell.

d. largest value in the column and the value in the cell.

Explain how to alter the transportation and assignment solution procedures for maximization problems.

Inventory

e. is held against uncertain usage so that a supply of items is available if needed.

f. constitutes a small part of the cost of doing business.

g. is not something that can be managed effectively.

h. each of the above is true.

Safety stock

i. can be determined by the EOQ formula.

j. depends on the inventory position.

k. depends on the variability of demand during lead time.

l. is not needed if Q* is the actual order quantity.

List four improvements that the implementation of an MRP system might provide.

When is qualitative forecasting used? Give examples of four types of qualitative forecasting.

TRUE or FALSE: The order-quantity reorder-point model with probabilistic demand sets the reorder point by using the probability distribution of demand during lead time.

What compromise must be made in the how-much-to-order decision?

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ANSWERS ARE IN BLUE

Explain how to use seasonal index values to create a forecast.

First, seasonal index is used to take into account the impact of the variability of the observed variable, for example sales, that is attributed to the seasonality of time and demand for the product or service. First, a liner equation of the historical data is created then a forecast is calculated using that equation. The resulting figure is then adjusted using the seasonal index relevant for that time period.

In the solution of the assignment problem, the opportunity lost is the difference between the

a. smallest value in the column and the value in the cell.

b. largest value in the row and the value in the cell.

c. smallest value in the row and the value in the cell.

d. largest value in the column and the value in ...

#### Solution Summary

The solution examines inventory and forecasting questions using the seasonal index values. An explanation of how to alter the transportation and assignment solution procedures for maximization problems is discussed.