Question

Over the past 5​ weeks, demand for wine at​ Winston's Winery has been 950​, 2,200​, 3,300​, 1,700​, and 1,250 bottles. Winston has placed weekly orders for glass bottles of 1,150​, 2,600​, 4,100​, 1,050​, and 900 units.​ (Recall that the sample variance of a data set can be found by using the VAR.S function in Excel or by plugging each value x of the data set into the​ formula:

Σ(x-x) 2 Variance (n-1)

where x is the mean of the data set and n is the number of values in the​ set.)

​a) The variance of demand for​ Winston's Winery is _____ ​(round your response to the nearest whole​ number).

​b) The variance of orders from​ Winston's Winery for glass bottles is ____​(round your response to the nearest whole​ number).

c) what is the bullwhip measure for glass bottles for Winston's Winery?

d) Is Winston's Winery providing an amplifying or smoothing effect?

What are the answers for a,b,c,d?

Answer 1

(a)

The variance of demand = VAR.S(950​,2200​,3300​,1700​,1250) = 853250

(b)

The variance of orders = VAR.S(1150​,2600​,4100​,1050​,900) = 1899250

(c)

Bullwhip measure = Variance of orders / Variance of demand = 1899250 / 853250 = 2.226

(d)

Since the bullwhip measure is larger than 1.0, it is amplification.