Question: ACME stoves stores are planning for its next fiscal year. The manager needs to forecast the sales for the coming year. Following are the sales from the last 7 years.

1. Forecast year 8 sales using a 2 year moving average.
2. Forecast year 8 sales using exponential smoothing (alpha = 0.4).
3. Forecast year 8 sales using adjusted exponential smoothing (alpha = 0.4; beta = 0.8)
4. Which method provides the best forecast according to MSE?
   The store is planning its inventory policy for year 8. The ordering cost is $4,200 per order, the carrying cost is $185 per stove, and the lead time is 7 days. Using the best demand forecast for year 8, answer the following questions:
5. What would be the optimal ordering quantity?
6. What would be the minimum inventory cost?
7. What would be the reorder point?
8. A Korean company is offering a new deal with the discounts showed below. What would be the best ordering policy considering the discounts?

j) The company wants to implement a 95% (z = 1.645) customer satisfaction level. What would be the safety inventory level, the annual cost of keeping the safety stock, and the new reorder point and (assume a daily demand standard deviation of 1.8 stoves)?

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