DEBRE BIRHAN UNIVERSITY (DBU)

COLLEGE OF BUSINESS AND ECONOMICS

Department of Management

Material Management (MGMT3151)

Group assignment

Section: B; Group One (1)

Group Members
S.No Name of student Id.No.
1 Tayto Mindahun DBU1502109
2 Alemnesh Mekibib DBU1502012
3 Biruk Bezawork DBU1502030
4 Haymanot Ashenafi DBU1502061
5 Tadelech Dereje DBU1502104
6 Ermiyas Yfru DBU1502152
7 Betelhem Abebe DBU1502026

Submission data: June 24, 2025

Submitted to: Mr. Shimekit A.
1. A company has collected the following data on monthly advertising spend (in $1,000s) and
corresponding sales revenue (in $1,000s):

Given data:
Advertising Spend (X) Sales Revenue (Y)
2 20
4 35
6 45
8 55
10 65
Tasks:
I. Estimate the regression equation Y =a+bx using the least squares method.
II. Use the regression equation to forecast sales revenue when advertising spend is
$7,000.
Solution:
I. To get the regression equation, we have to calculate the required values as it indicates in the
Table below.
Advertising Spend Sales Revenue 2
X XY
(X) (Y)
2 20 4 40
4 35 16 140
6 45 36 270
8 55 64 440
10 65 100 650
∑ X=¿ ¿ 30 ∑ Y =¿ ¿220 ∑ X =¿ ¿ ∑ XY =¿ ¿
2

220 1540

n ∑ XY −(∑ X )( ∑ Y )
b=
n ∑ X −¿ ¿ ¿
2

a=
∑ Y −b ∑ X = 220−5.5 x 30 = 220−165 =11
n 5 5
The regression equation using the values of a and b obtained above becomes,
Y =11+5.5 X

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II. Now, forecast sales revenue when advertising spend is $7,000 (X = 7):
To forecast sales revenue when advertising spend is $7,000, we can use the regression equation
already derived in above:
Y =11+5.5 X
Where:
 Y = Predicted Sales Revenue (in $1,000s)
 X = Advertising Spend (in $1,000s)
Given:
 X=7 (i.e., $7,000)
Y =11+5.5∗7
Y =11+38.5
Y =49.5
Therefore, the forecasted sales revenue when advertising spend is $7,000 is $49,500.
2. A researcher is studying the relationship between rainfall (in cm) and crop yield (in quintals
per hectare). The data collected over five years is as follows:
Given data:
Rainfall (X) Crop Yield (Y)
50 120
60 150
70 160
80 180
90 200
Tasks:
I. Develop a linear regression model Y =a+bx for predicting crop yield based on
rainfall.
II. Forecast the crop yield if the rainfall is expected to be 75 cm.
Solution:
I) Linear regression model based on rainfall data given can be calculated as follows.

Step 1: Calculate sums

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 Rainfall (X) Crop Yield (Y) X2 XY
50 120 2500 6000
60 150 3600 9000
70 160 4900 11200
80 180 6400 14400
90 200 8100 18000
∑ X=¿ ¿ ∑ Y =¿ ¿810 ∑ X 2=¿ ¿25 ∑ XY =¿ ¿58
350 500 600

n ∑ XY −(∑ X )( ∑ Y )
b=
n ∑ X −¿ ¿ ¿
2

a=
∑ Y −b ∑ X = 810−1.9 x 350 = 810−665 =29
n 5 5
Therefore, the regression equation becomes;
Y =29+1.9 X
I) Forecast crop yield when rainfall is 75 cm:
Y =29+1.9 X=29+1.9 x 75=29+142.5=171.5 quintals/hectare .
3. A company records its monthly demand (in units) for a new product over 8 months as shown
below:
Given data:
Mont Actual Demand (Y)
h
1 250
2 260
3 265
4 275
5 290
6 300
7 310
8 320
Tasks:

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 1. Using the first month’s demand as the initial forecast (i.e., F1=Y1=250), compute the
forecast for each month from month 2 to month 8.
2. Calculate the Mean Absolute Deviation (MAD) of your forecasts.
3. Based on the MAD, evaluate whether α=0.3\alpha = 0.3α=0.3 is appropriate, or if a
higher or lower smoothing constant might be better. Justify your answer.
Solution:
1) We are asked to apply simple exponential smoothing to forecast demand, using a smoothing
constant α = 0.3, using the following equation:
F t=F t −1 +α ( At −1−F t−1)
Step-by-step forecast calculations are shown below.
 F1 = Y1 = 250 (given)
 F₂ = 250 + 0.3 × (250 − 250) = 250.0
 F₃ = 250.0 + 0.3 × (260 − 250.0) = 253.0
 F₄ = 253.0 + 0.3 × (265 − 253.0) = 256.6
 F₅ = 256.6 + 0.3 × (275 − 256.6) = 262.1
 F₆ = 262.1 + 0.3 × (290 − 262.1) = 270.5
 F₇ = 270.5 + 0.3 × (300 − 270.5) = 279.4
 F₈ = 279.4 + 0.3 × (310 − 279.4) = 288.6
Forecast results table
Month Actual Demand (Yt) Forecast (Fₜ),
α =0.3
| A t−F t| or (Error)
1 250 250 -
2 260 250 10.0
3 265 253 12.0
4 275 256.6 18.4
5 290 262.12 27.9
6 300 270.484 29.5
7 310 279.3388 30.6
8 320 288.53716 31.4

2) Mean Absolute Deviation (MAD):

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Mean Absolute Deviation (MAD) quantifies the average absolute difference between forecasted
values and actual sales values over a specific period. It is calculated by using the following
equation:
n
1
MAD= ∑ |A −F t|
n t=1 t
Where:
 At = Actual value at time t
 Ft= Forecast value at time t
 n = Number of periods (excluding the first one since there's no error in F₁)

10+12+18.4 +27.9+29.5+30.6+ 31.4 159.8

MAD= = =22.8
7 7
On average, the forecast value is 22.8 units off from the actual demand.
Since demand is increasing, this consistent error suggests that the model is lagging behind the
trend. A higher α may be more responsive, reducing this lag and lowering the MAD.
3) Based on the MAD, evaluate whether α=0.3\alpha = 0.3α=0.3 is appropriate, or if a higher or
lower smoothing constant might be better. Justify your answer.
(Note: We believe this part of the question may contain an editing error. However, we have
addressed it based on our understanding of the intended meaning.).

To answer this question, it is better to take different values for smoothing constant (percentage),
and then calculate Mean Absolute Deviation (MAD) values for each. The values are presented in
the Table below using EXCEL to calculate the values.

Actual
Forecast (Fₜ) | A t−F t| or (Error)
Month α =0.3 α =0. 5 α =0. 5
Demand (Yt) α =0. 7 α =0.3
α =0. 7
1 250 250 250 250 - - -
2 260 250 250 250 10 10 10
3 265 253 255 258 12 10 7
4 275 256.6 260 260.6 18.4 15 14.4
5 290 262.12 267.5 271.52 27.9 22.5 18.48
6 300 270.484 278.75 282.284 29.5 21.25 17.716
289.37
7 310 279.339 292.923 30.6
5 20.625 17.0772

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 299.68
8 320 288.537 303.037 31.4
8 20.3125 16.96324
∑ 159.8 ∑ 119.68 ∑ 101.63

As it has seen from the table, the forecast lags behind the actual trend due to a low α value
(which gives more weight to older forecasts). With α = 0.3, only 30% weight is given to the most
recent actual value, while 70% weight is given to past forecasts.
Mean Absolute Deviation (MAD) can be calculated as:
When α =0.5
n
1
MAD= ∑ |A −F t|= 119.68
n t=1 t 7
=17.1

When α =0. 7
n
1
MAD= ∑ |A −F t|= 101.63
n t=1 t 7
=14.5

Since the demand is increasing steadily, we need a forecast that can quickly adapt to the rising
trend.
A higher α (0.5 or 0.7 as indicates in table) would:
Place more weight on recent data.
React faster to changes in the actual demand.
Reduce lag, potentially lowering MAD.
Conclusion:
α = 0.3 is not ideal in this case because it responds too slowly to upward trends in
demand (higher MAD value).
A higher smoothing constant (α = 0.5 to 0.7) is likely to provide better forecasting
performance (lower MAD value) by improving responsiveness.
α = 0.7 produces the lowest MAD (14.5) and thus provides the most accurate and
responsive forecast for this steadily increasing demand.
Therefore, α = 0.7 is more appropriate than 0.3 in this case.

Part two: Chapter 6 – Materials Handling and Logistics

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Objective:
To deepen understanding of materials handling and logistics systems and their practical
applications, with a focus on Ethiopia's context.

Instructions:
You are required to prepare a comprehensive report addressing the following tasks. The report
should be structured, well-researched, and referenced. You may include diagrams, tables, and
real-life examples to support your analysis.

Tasks:
Part 1: Conceptual Understanding (5pts)
1. Define materials handling and explain its significance in industrial and logistics
operations.
2. List and explain at least five benefits of proper materials handling.
3. Differentiate between materials handling systems and materials handling equipment,
providing examples of each.

1. Define materials handling and explain its significance.

One of the definitions adopted by the American Materials Handling Society is: Materials
handling is the art and science involving the moving, packaging and storing of substances in any
form (Siddhartharay, 2008a). Some of the other definitions are:
 Materials handling is the movement and storage of materials at the lowest possible cost
through the use of proper methods and equipment.
 Materials handling is the moving of materials or product by any means, including
storage, and all movements except processing operations and inspection.
 Materials handling is the art and science of conveying, elevating, positioning,
transporting, packaging and storing of materials.
Generally, materials handling involves the movement, storage, control, and protection of
goods in production, warehousing, and distribution.
Materials handling significance in industrial and logistics

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  Improve efficiency of a production system by ensuring the right quantity of materials
delivered at the right place at the right time most economically.
 Cut down indirect labor cost.
 Reduce damage of materials during storage and movement.
 Maximize space utilization by proper storage of materials and thereby reduce storage
and handling cost.
 Minimize accident during materials handling.
 Reduce overall cost by improving materials handling.
 Improve customer services by supplying materials in a manner convenient for
handlings.
 Supports supply chain flow (just-in-time delivery).
2. List and explain five benefits of proper materials handling.
Carefully planned and operated materials-handling policies can result in the following benefits:
1. Lower Costs: Reduces labor, damage, and storage expenses.
2. Higher Productivity: Faster movement = more output.
3. Better Safety: Fewer accidents (e.g., forklift collisions).
4. Space Savings: Vertical storage maximizes warehouse capacity.
5. Improved Customer Service: Faster, more accurate order fulfillment.
3. Differentiate between materials handling systems and equipment with
examples.
Materials handling equipment refers to the individual tools used to move or store materials;
materials handling systems are broader and integrate multiple types of equipment and processes
into a unified operational flow.
Table 1. Summary of the difference materials handling systems and equipment.

Materials Handling Systems Materials Handling Equipment

 An integrated setup of equipment, processes,  Individual mechanical devices used
and controls to manage the movement and to move, store, control, or position
storage of materials. materials
 Highly integrated and often automated  May operate independently
 End-to-end control and flow of materials  Specific tasks like lifting, moving,
or storing
 Examples: Conveyor system, Automated  Examples: Forklift, pallet jack,

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 Storage & Retrieval System (AS/RS), AGV crane, hoist, storage rack, bin, robot
system, Flexible Manufacturing System arm

Part 2: Application and Analysis (4pts)

4. Identify three materials handling equipment types and for each:
Describe its specifications
State its appropriate usage conditions
Explain its advantages and limitations
A. Forklift (Powered Industrial Truck)

Basic specifications:

 Load capacity: 1 to 10 tons (commonly 2–5

tons)
 Lift height: Up to 6 meters (some specialized
forklifts go higher)
 Power source: Electric, diesel, or LPG
 Controls: Hydraulic lift system with fork tines
Fig. 1. Forklift (Powered Industrial Truck).
Appropriate usage conditions:
 Indoor or outdoor warehouses and factories.
 Suitable for lifting and transporting pallets or heavy loads over short distances.
Advantages:
 Versatile and easy to move.
 Reduces manual labor.
 Can lift heavy and bulky items.
Limitations:
 Requires trained operator.
 Not suitable for narrow aisles (unless it’s a narrow-aisle forklift).
 Fuel-powered types emit emissions (not ideal for closed environments).
B. Conveyor Belt System

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 Specifications:

 Types: Roller, belt, chain-driven

 Load capacity: Depends on belt
width and material
 Speed: Typically, 0.1 to 2 m/s
(adjustable)
 Power source: Electric motor

Fig. 2. Conveyor Belt System.

Appropriate usage conditions:
 Best for fixed-path, continuous material movement.
 Suitable in assembly lines, packaging units, and distribution centers.
Advantages:
 High efficiency and speed for continuous transport.
 Reduces handling time.
 Can be automated and integrated with sensors.
Limitations:
 Fixed path – lacks flexibility
 High initial installation cost
 Maintenance required to prevent downtime
C. Pallet Jack (Manual or Electric)

Fig. 3. Pallet Jack (Manual or Electric).

Specifications:
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  Load capacity: Up to 3 tons
 Fork length: Typically, 1150 mm
 Lift height: 200 mm (just enough to lift pallets off the floor)
 Types: Manual (hydraulic) or powered (electric walk-behind)
Appropriate usage conditions:
 Ideal for flat, indoor surfaces
 Short-distance material movement within warehouses or stores
Advantages:
 Low cost and easy to operate
 Compact and maneuverable
 No emissions (manual or electric types)
Limitations:
 Limited lift height and load capacity
 Not suitable for rough terrain or long distances
5. Discuss the key guidelines for selecting materials handling equipment in a warehouse or
production facility.
Materials handling is the art and science involving the moving, packaging and storing of
substances in any form (Siddhartharay, 2008b). When choosing materials handling equipment in
a warehouse or production facility, it is better to consider the following guidelines.
Table 2. Guidelines to select materials handling equipment.

Guideline Description
 Consider size, weight, shape, fragility, and whether it’s solid,
1. Nature of the material
liquid, or gas.
 Evaluate how much material needs to be moved and how
2. Volume and flow
frequently.
 Determine the transport distance and route layout (straight line,
3. Distance and path
curved, vertical).
 Choose equipment suitable for available space, aisle widths,
4. Facility layout
and ceiling height.
 Ensure equipment minimizes worker injury and complies with
5. Safety and ergonomics
safety standards.
 Evaluate purchase, installation, maintenance, and operating
6. Cost
costs versus benefits.
7. Flexibility  Select equipment adaptable to future layout or product

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 changes.
 Consider temperature, humidity, and cleanliness (e.g., food-
8. Environment
grade or explosion-proof equipment may be needed).
 Prioritize equipment with lower energy consumption and
9. Energy efficiency
environmental impact.
 Equipment should integrate with inventory and warehouse
10. Integration with systems
management systems (WMS).

6. Evaluate a real or hypothetical case of a materials handling system in an Ethiopian

manufacturing or logistics company.

Case Study: Materials Handling System at Habesha Breweries S.C. – Debre

Berhan Plant
1. Company overview:
Habesha Breweries S.C. is one of Ethiopia’s leading beer producers, known for Habesha Beer.
The Debre Berhan plant, situated at high elevation (~2,840 meters), is a major production site
equipped with modern brewing, bottling, and distribution systems.
Table 3. Materials handling system components in the plant.

System Component Description

 Used extensively to move bottles through washing,
 Conveyor Belt System
filling, labeling, and packaging lines.
 Used to move pallets of raw materials (barley, hops,
 Forklifts
bottles) and finished beer products.
 Manual and electric jacks help in small-batch internal
 Pallet Jacks
transport between storage and production.
 Heavy-duty racks for storing bottles/crates; silos used for
 Storage Racks & Silos
bulk malt and grain storage.
 Specialized roller tracks and lifts for handling heavy beer
 Keg Handling System
kegs.
 Includes dock levelers, dock seals, and truck restraints to
 Loading Dock Equipment
facilitate safe vehicle loading.
 Used to transport the final products from place to place
 Heavy trucks
along long distance

2. How the system operates

1. Raw Material Intake: Forklifts unload barley, malt, and hops; grain is stored in silos.
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 2. Production Line: Automated conveyors carry bottles through:
 Rinsing and sterilization
 Filling with beer
 Capping/sealing
 Labeling and coding
3. Packaging and Palletizing: Finished products are packed (in crates or boxes) and
stacked on pallets.
4. Warehouse and Storage: Forklifts transfer pallets to the finished goods warehouse,
placed on racks.
5. Dispatch: Products are loaded onto delivery trucks using forklifts and dock equipment.
Table 4. Advantages of the system.

Advantage Explanation
 Automated conveyors and palletizers speed up bottling and
Efficient and Fast
packaging processes.
Labor Saving  Minimizes manual lifting and increases worker safety.
 Pallet-based system improves inventory management and space
Organized Storage
utilization.
Adaptability  Suitable for both bottles and kegs with minor adjustments.
Integration with  Materials handling data is linked to SAP-based inventory and
ERP production systems.

3. Limitations and challenges

Table 5. Limitations and challenges.

Limitation Explanation
 Interruptions can halt automated systems; backup
Power outages
systems may be costly.
Limited automation in raw  Grain unloading still involves semi-manual steps.
material area
 Conveyor and lifting systems need frequent maintenance
Maintenance demands
in dust/moist environments.
 Risk of injury if forklifts and workers are not carefully
Safety concerns
coordinated.

4. Recommendations for improvement

 Solar power integration: Reduce power dependency for conveyor systems and lights.

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  AGVs or Tuggers: Introduce low-cost AGVs for internal crate movement to reduce
forklift traffic.
 IoT Tracking: Use RFID/barcodes for real-time tracking of batches and pallets.
 Warehouse expansion: Build vertical racking systems with reach trucks to improve
capacity.

Part 3: Local Practices and Logistics Management (4 pts)

7. Describe current materials disposal practices in Ethiopia. What challenges are

commonly observed in industries or public sectors?
 Materials refer to resources that contribute to economic activity that have physical
existence and used directly or indirectly in producing a product or a service and owned
by an organization needed to do a particular economic activity (Masaro, 2018). In
Ethiopia, materials disposal particularly solid waste and industrial by-products is
managed through a mix of traditional and modern methods, but with significant gaps in
infrastructure and enforcement.
Table 6. Typical disposal practices in Ethiopia.

Sector Typical disposal practices

 Open dumping in landfills (Example: Repi landfill in Addis Ababa)
Municipal/Public
 Waste collection by municipal trucks or informal workers
 Disposal to municipal dumpsites.
Industrial  Incineration (mainly for hazardous or medical waste)
 Effluent discharge with basic or no treatment in some sectors
 Organic waste often dumped or used as compost
Agricultural
 Crop residues burned or left in fields
Common challenges:
 Inadequate infrastructure
 Poor segregation and recycling
 Limited regulation enforcement
 Industrial waste mismanagement
 Lack of public awareness
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8. Discuss the roles of transportation and traffic management in logistics performance.
The processes of managing transport services create a transport and logistics system. The
efficiency of management of these processes is significantly influenced by the forecast and
planning of correspondence of cargo flows, distribution of resources (Sirina & Zubkov, 2021).
Transportation in logistics:
Logistics is defined by council of logistics management as the process of planning, implementing
and controlling the efficient, effective flow and storage of goods, services and related
information from point of origin to point of consumption for the purpose of conforming to
customer requirements (Debela, 2013). Transportation is the backbone of logistics, involving
movement of raw materials, in-process goods, and finished products. In Ethiopia, trucks
dominate due to the limited railway network and underdeveloped waterways.
Key functions:
 Enables supply chain continuity.
 Reduces lead time and ensures delivery reliability.
 Facilitates access to markets (especially for exports like coffee and textiles).
Traffic management in logistics
Traffic management ensures smooth, safe, and efficient flow of goods, especially in urban areas.
Table 7. The role of transport and its impact on logistics.

Role Impact on logistics

Route optimization  Reduces delivery time and fuel costs
Urban traffic control  Essential in cities like Addis Ababa where congestion
delays shipments
Regulation of freight movements  Restrictions on truck movements during peak hours
affect delivery windows
Coordination with public works  Construction projects or poor roads increase transit
delays and damage

Challenges in Ethiopia:
 Poor road conditions and maintenance.
 Traffic congestion in urban centers.
 Lack of integrated logistics hubs and cold chain transport.
 Over-reliance on roads with limited air and rail options.

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9. Define in-bound logistics and analyze how poor inbound logistics affect operational
efficiency in Ethiopia (use examples if possible).
Definition:
Inbound logistics involves the transportation, storage, and delivery of incoming goods or
materials from suppliers to a manufacturing plant, warehouse, or facility. Inbound logistics
involves activities like transportation, storage, delivery of goods and raw material from suppliers
to a business. Managing transportation from different suppliers and constant coordination is
essential to ensure that there are no delays in the production line. It includes:
 Supplier sourcing and coordination.
 Scheduling deliveries.
 Receiving and inspecting materials.
 Storing or moving items to production.
Table 8. Impact of poor inbound logistics in Ethiopia.

Issue Operational Impact

 Interrupts production schedules (e.g., breweries waiting for
Delivery delays
bottles or labels)
 Inadequate inspection can lead to defective raw materials
Quality Issues on Arrival
entering the process
 Increases product cost due to inefficient supplier location or
High transport costs
route planning
 Poor visibility and planning lead to either production halts or
Stockouts or overstocking
high inventory holding costs
 Weak supplier coordination leads to inconsistent material
Communication gaps
flow

Example from Ethiopia:

 Textile factories in Hawassa industrial park: Delays in receiving imported cotton or
dye chemicals via Djibouti port affect production deadlines, which hurts export
commitments to international buyers.
 Brewery Sector (Example: Habesha, Heineken breweries): Dependence on imported
caps, machinery parts, or additives may face clearance delays at dry ports, halting
bottling lines and disrupting supply chains.

References
Debela, F. M. (2013). Logistics Practices in Ethiopia. Unpublished Document, 9–25.

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Masaro, M. M. (2018). The Disposal Practice of Materials in the Public Sector ( The Case of
Selected Sub-Cities of Addis Ababa , Ethiopia ). Research Journal of Finance and
Accounting, 9(1), 11–23.
Siddhartharay. (2008a). Intoroduction to Materials Handling (N. A. I. (P) Ltd (ed.)). New Age
International (P) Ltd.
Siddhartharay. (2008b). Introduction to Materials Handling.
Sirina, N., & Zubkov, V. (2021). Transport Services Management on Transport and Logistic
Methods. Transportation Research Procedia, 54(2020), 263–273.
https://doi.org/10.1016/j.trpro.2021.02.072

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