Altavox

CASE : ALTAVOX ELECTRONICS

Altavox is a manufacturer and distributor of many different electronic instruments and devices, including digital/among multilmeters, function generators, oscilloscopes, frequency counters, and other test and measuring equipment. Altavox sells a line to test meters that are popular with professional electricians. The model VC0202 is sold though five distributors to retail stores in the United States. These distributors are located in Atlanta, Boston, Chicago, Dallas, and Los Angeles and have been selected to serve different regions in the country.

The model VC202 has been a steady seller over the years due to its reliability and rugged construction. Altavox does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 13 weeks is shown in the following table.

These data are contained in an Excel spreadsheet Altavox Data. The demand in the regions varies between a high of 40 units on average per week in Atlanta and 48 units in Dallas. This quarter’s data are pretty close to the demand last quarter.

Management would like you to experiment with some forecasting models to determine what should be used in a new system being implemented. The new system is programmed to use one of two models: simple moving average or exponential smoothing.

QUESTIONS

1. Consider using a simple moving average model. Experiment with models using five weeks and three weeks past data. The past data in each region is given below (week -1 is the week before week 1 in the table. -2 is two weeks before week 1, etc.). Evaluate the forecasts that would have made over the 13 weeks for each distributor using the mean absolute deviation. Mean absolute percent error. And tracking single as criteria.

2. Next, consider using a simple exponential smoothing model. In your analysis, test two alpha values. .2 and. 4. Use the same criteria for evaluating the model as in question 1....