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SB Coffee’sactual distribution system

SB Coffee has a large, nationwide supply chain that must efficiently supply over 200stores. Although the stores might appear to be very similar, they are actually verydifferent. Depending on the location of the store, its size, and the profile of thecustomers served, SB Coffee management configures the store offerings to takemaximum advantage of the space available and customer preferences. SB Coffee’sactual distribution system is much more complex, but the information below isdirected at only a single item that is currently distributed through five distributioncentres in Australia. The item is a logo branded coffee maker that is sold at some ofthe larger retail stores. The coffeemaker has been a steady seller over the years dueto its reliability and rugged construction. SB Coffee does not consider this as aseasonal product, but there is some variability in demand. Demand for the productover the past 13 weeks is shown in the following table. The demand at thedistribution centres (DCs) varies from a maximum of 68 at Sydney in Week Number13 and a minimum of 10 in Week Number 12 at Darwin.Management would like you to experiment with some forecasting models todetermine what should be used in a new system to be implemented. Their initialrequest is provide recommendations over two forecasting models: simple movingaverage and exponential smoothing.Week NumberDistributionCentre1 2 3 4 5 6 7 8 9 10 11 12 13Darwin 18 15 15 13 12 12 14 13 13 13 12 10 11Brisbane 22 25 20 22 21 20 23 20 20 21 23 20 21Sydney 48 47 49 52 53 53 55 56 58 61 63 66 68Adelaide 36 38 39 42 38 41 42 44 45 47 47 51 52Hobart 18 20 22 18 22 19 18 20 21 19 21 20 18QuestionApply the simple exponential smoothing model to forecast demand for thenext 3 weeks. In your analysis, test two alpha values, 0.2 and 0.4. Use thesame criteria for evaluating the model as in part 1. Assume that the forecastfor week 1 is the past three-week average.Simple Exponential SmoothingAlpha.20t Sydney 12345678910111213 48474952535355565861636668 Smoothed50.3 *49.949.349.249.850.450.951.852.653.755.156.758.660.5…

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