INTE Exam Dumps : Supply Management Integration

The absolute value of the forecast error is calculated as the average of the absolute differences between forecasted and actual demand. Calculating each period: |30-31| + |25-31| + |28-26| + |25-20| = 1 + 6 + 2 + 5 = 14. Therefore, the absolute value of the forecast error is 14. Reference: Demand forecasting and error measurement techniques.

The EOQ formula considers order costs and carrying costs. With the increase in carrying costs from $4 to $6 in Year 2, the EOQ will decrease, specifically to 32 units, as higher carrying costs lead to lower optimal order quantities. This balances inventory holding costs against order costs. Reference: Economic Order Quantity calculation and inventory management.

Capital expenditure policies primarily relate to fixed assets, as they involve investments in long-term assets that are capitalized and depreciated over time. Reference: Horngren, C. T., Datar, S. M., & Rajan, M. V. (2015). Cost Accounting: A Managerial Emphasis.