4. Operations Analytics

Forecasting Applications — Quiz

Test your understanding of forecasting applications with 5 practice questions.

Practice Questions

Question 1

What is the primary use of the Economic Order Quantity (EOQ) formula in inventory management?

Question 2

Given an annual demand of $D=10000$ units, an ordering cost $S=50$ per order, and a holding cost $H=2$ per unit per year, what is the EOQ?

Question 3

Using the EOQ computed in the previous question (EOQ $=707$ units), what is the approximate total annual ordering and holding cost?

Question 4

What is a key advantage of using Holt’s linear trend method over simple exponential smoothing in sales forecasting?

Question 5

Given last period level $L_{t-1}=500$, trend $T_{t-1}=20$, smoothing constants $\alpha=0.4$ and $\beta=0.2$, and actual demand $D_t=540$, what are the updated level $L_t$ and trend $T_t$?