Question

Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the stores might appear to be very similar, they are actually very different. Depending on the location of the store, its size, and the profile of the customers served, Starbucks management configures the store offerings to take maximum advantage of the space available and customer preferences.

     Starbucks’ actual distribution system is much more complex, but for the purpose of our exercise let’s focus on a single item that is currently distributed through five distribution centers in the United States. Our item is a logo branded coffeemaker that is sold at some of the larger retail stores. The coffeemaker has been a steady seller over the years due to its reliability and rugged construction. Starbucks does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 18 weeks is shown in the following table. (week −1 is the week before week 1 in the table, −2 is two weeks before week 1, etc.).

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

WEEK	−5	−4	−3	−2	−1	1	2	3	4	5	6	7	8	9	10	11	12	13
Atlanta	35	34	33	58	32	32	46	35	33	54	30	20	58	46	35	26	57	42
Boston	58	29	49	45	33	34	33	45	42	46	49	55	21	64	45	33	43	53
Chicago	53	24	62	40	40	45	33	26	50	47	65	65	30	25	95	34	44	48
Dallas	36	30	34	55	40	28	28	35	38	47	60	68	62	45	40	35	46	43
LA	42	42	46	38	36	36	42	44	46	46	66	42	35	39	42	45	50	50
Total	224	159	224	236	181	175	182	185	209	240	270	250	206	219	257	173	240	236

a. Consider using a simple moving average model. Experiment with models using five weeks’ and three weeks’ past data. (Round your answers to 2 decimal places.)

3-week MA

Week	ATL	BOS	CHI	DAL	LA	Total
1
2
3
4
5
6
7
8
9
10
11
12
13

5-week MA

Week	ATL	BOS	CHI	DAL	LA	Total
1
2
3
4
5
6
7
8
9
10
11
12
13

b. Evaluate the forecasts that would have been made over the 13 weeks using the overall (at the end of the 13 weeks) mean absolute deviation, mean absolute percent error, and tracking signal as criteria. (Round your answers to 2 decimal places. Negative values should be indicated by a minus sign.)

		ATL	BOS	CHI	DAL	LA	Avg of DCs
3-week MA	MAD
	MAPE
	TS
5-week MA	MAD
	MAPE
	TS

Answer 1

a. Consider using a simple moving average model. Experiment with models using five weeks’ and three weeks’ past data. (Round your answers to 2 decimal places.)
3-week MA
Week	ATL	BOS	CHI	DAL	LA	Total
1	40.67	37.33	41.67	41.00	36.67	197.33
2	36.67	33.33	39.33	32.00	38.00	179.33
3	37.67	37.33	34.67	30.33	40.67	180.67
4	38.00	40.00	36.33	33.67	44.00	192.00
5	40.67	44.33	41.00	40.00	45.33	211.33
6	39.00	45.67	54.00	48.33	52.67	239.67
7	34.67	50.00	59.00	58.33	51.33	253.33
8	36.00	41.67	53.33	63.33	47.67	242.00
9	41.33	46.67	40.00	58.33	38.67	225.00
10	46.33	43.33	50.00	49.00	38.67	227.33
11	35.67	47.33	51.33	40.00	42.00	216.33
12	39.33	40.33	57.67	40.33	45.67	223.33
13	41.67	43.00	42.00	41.33	48.33	216.33
5-week MA
Week	ATL	BOS	CHI	DAL	LA	Total
1	37.8	38	42.2	37.4	39.6	195
2	40.2	38.8	44	37	39.6	199.6
3	40.6	38	36.8	37.2	39.2	191.8
4	35.6	37.4	38.8	33.8	40.8	186.4
5	40	40	40.2	35.2	42.8	198.2
6	39.6	43	44.2	41.6	48.8	217.2
7	34.4	47.4	50.6	49.6	48.8	230.8
8	39	42.6	51.4	55	47	235
9	41.6	47	46.4	56.4	45.6	237
10	37.8	46.8	56	55	44.8	240.4
11	37	43.6	49.8	50	40.6	221
12	44.4	41.2	45.6	45.6	42.2	219
13	41.2	47.6	49.2	41.8	45.2	225
b. Evaluate the forecasts that would have been made over the 13 weeks using the overall (at the end of the 13 weeks) mean absolute deviation, mean absolute percent error, and tracking signal as criteria. (Round your answers to 2 decimal places. Negative values should be indicated by a minus sign.)
		ATL	BOS	CHI	DAL	LA	Avg of DCs
3-week MA	MAD	2.41	3.69	7.42	8.58	4.35	18.12
	MAPE	26.74%	19.22%	31.22%	16.83%	10.06%	9.33%
	TS	210.28	149.05	80.86	67.10	131.04	154.73
5-week MA	MAD	2.06	3.24	4.41	7.07	2.99	16.08
	MAPE	23.17%	21.14%	32.52%	22.04%	13.85%	11.55%
	TS	246.72	169.92	134.84	81.44	189.00	173.87
3-week MA	ATL				BOS				CHI				DAL				LA			Total
Week	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error
1	32	40.67	40.67	27%	34	37.33	37.33	10%	45	41.67	41.67	7%	28	41.00	41.00	46%	36	36.67	36.67	2%	175	197.33	197.33	13%
2	46	36.67	77.33	20%	33	33.33	70.67	1%	33	39.33	81.00	19%	28	32.00	73.00	14%	42	38.00	74.67	10%	182	179.33	376.67	1%
3	35	37.67	115.00	8%	45	37.33	108.00	17%	26	34.67	115.67	33%	35	30.33	103.33	13%	44	40.67	115.33	8%	185	180.67	557.33	2%
4	33	38.00	153.00	15%	42	40.00	148.00	5%	50	36.33	152.00	27%	38	33.67	137.00	11%	46	44.00	159.33	4%	209	192.00	749.33	8%
5	54	40.67	193.67	25%	46	44.33	192.33	4%	47	41.00	193.00	13%	47	40.00	177.00	15%	46	45.33	204.67	1%	240	211.33	960.67	12%
6	30	39.00	232.67	30%	49	45.67	238.00	7%	65	54.00	247.00	17%	60	48.33	225.33	19%	66	52.67	257.33	20%	270	239.67	1,200.33	11%
7	20	34.67	267.33	73%	55	50.00	288.00	9%	65	59.00	306.00	9%	68	58.33	283.67	14%	42	51.33	308.67	22%	250	253.33	1,453.67	1%
8	58	36.00	303.33	38%	21	41.67	329.67	98%	30	53.33	359.33	78%	62	63.33	347.00	2%	35	47.67	356.33	36%	206	242.00	1,695.67	17%
9	46	41.33	344.67	10%	64	46.67	376.33	27%	25	40.00	399.33	60%	45	58.33	405.33	30%	39	38.67	395.00	1%	219	225.00	1,920.67	3%
10	35	46.33	391.00	32%	45	43.33	419.67	4%	95	50.00	449.33	47%	40	49.00	454.33	23%	42	38.67	433.67	8%	257	227.33	2,148.00	12%
11	26	35.67	426.67	37%	33	47.33	467.00	43%	34	51.33	500.67	51%	35	40.00	494.33	14%	45	42.00	475.67	7%	173	216.33	2,364.33	25%
12	57	39.33	466.00	31%	43	40.33	507.33	6%	44	57.67	558.33	31%	46	40.33	534.67	12%	50	45.67	521.33	9%	240	223.33	2,587.67	7%
13	42	41.67	507.67	1%	53	43.00	550.33	19%	48	42.00	600.33	13%	43	41.33	576.00	4%	50	48.33	569.67	3%	236	216.33	2,804.00	8%
Average				27%				19%				31%				17%				10%				9%
5-week MA	ATL					BOS				CHI				DAL				LA			Total
Week	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error	Actual	Forcasted	RSFE	Absolute Percent Error
1	32	37.80	37.80	18%	34	38	38.00	12%	45	42.2	42.20	6%	28	37.4	37.40	34%	36	39.6	39.60	10%	175	195	195.00	11%
2	46	40.20	78.00	13%	33	38.8	76.80	18%	33	44	86.20	33%	28	37	74.40	32%	42	39.6	79.20	6%	182	199.6	394.60	10%
3	35	40.60	118.60	16%	45	38	114.80	16%	26	36.8	123.00	42%	35	37.2	111.60	6%	44	39.2	118.40	11%	185	191.8	586.40	4%
4	33	35.60	154.20	8%	42	37.4	152.20	11%	50	38.8	161.80	22%	38	33.8	145.40	11%	46	40.8	159.20	11%	209	186.4	772.80	11%
5	54	40.00	194.20	26%	46	40	192.20	13%	47	40.2	202.00	14%	47	35.2	180.60	25%	46	42.8	202.00	7%	240	198.2	971.00	17%
6	30	39.60	233.80	32%	49	43	235.20	12%	65	44.2	246.20	32%	60	41.6	222.20	31%	66	48.8	250.80	26%	270	217.2	1,188.20	20%
7	20	34.40	268.20	72%	55	47.4	282.60	14%	65	50.6	296.80	22%	68	49.6	271.80	27%	42	48.8	299.60	16%	250	230.8	1,419.00	8%
8	58	39.00	307.20	33%	21	42.6	325.20	103%	30	51.4	348.20	71%	62	55	326.80	11%	35	47	346.60	34%	206	235	1,654.00	14%
9	46	41.60	348.80	10%	64	47	372.20	27%	25	46.4	394.60	86%	45	56.4	383.20	25%	39	45.6	392.20	17%	219	237	1,891.00	8%
10	35	37.80	386.60	8%	45	46.8	419.00	4%	95	56	450.60	41%	40	55	438.20	38%	42	44.8	437.00	7%	257	240.4	2,131.40	6%
11	26	37.00	423.60	42%	33	43.6	462.60	32%	34	49.8	500.40	46%	35	50	488.20	43%	45	40.6	477.60	10%	173	221	2,352.40	28%
12	57	44.40	468.00	22%	43	41.2	503.80	4%	44	45.6	546.00	4%	46	45.6	533.80	1%	50	42.2	519.80	16%	240	219	2,571.40	9%
13	42	41.20	509.20	2%	53	47.6	551.40	10%	48	49.2	595.20	3%	43	41.8	575.60	3%	50	45.2	565.00	10%	236	225	2,796.40	5%
Average				23%				21%				33%				22%				14%				12%